Bullock Stamps Out Predictions About RBA Interest Rates
Synopsis
As the world responds to the impact of Trump’s tariffs, Australia is making preparations for the impact as well. Almost 200 billion dollars has come off the ASX over the last few days. Amidst…
As the world responds to the impact of Trump’s tariffs, Australia is making preparations for the impact as well. Almost 200 billion dollars has come off the ASX over the last few days. Amidst the chaos, there have been predictions of rate cuts coming in May. Reserve Bank governor Michele Bullock has squashed those predictions and insisted it’s “too early” to determine how Trump’s tariffs will affect RBA interest rates.
“We are mindful of not adding to the uncertainty, and to that end, it’s too early for us to determine what the path will be for interest rates,” she said.
Following the announcement on “Liberation Day,” there were predictions of quick interest rate cuts and a recession in the US. Then, Trump announced a pause on the tariffs.
According to a report from news.com.au, there could be a silver lining to the economic fallout. Interest rate cuts could save homeowners about $76 to $156 per month on their mortgage payments, depending on the size of the loan.
ANZ chief economist Richard Yetsenga weighed in on the matter:
“We now expect the RBA to ease in May, July and August – 25 basis points at each meeting,’’ he said.
“This would see the cash rate at 3.35 per cent in August. We do not rule out a 50bp cut in May if sentiment sours and the global growth outlook deteriorates sufficiently.”
Cuts RBA Interest Rates to Follow Next Meeting
Treasurer Jim Chalmers had pointed to potential cuts to RBA interest rates this year as well.
“The next Reserve Bank interest rate cut in May might be as big as 50 basis points,” he said.
However, Chalmers also shared the stance that forecasting is difficult in the midst of such economic uncertainty.
Sources:
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