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Central Banks Signal Patience as Trade Policy Shifts Create Economic Uncertainty

RBA Governor Michele Bullock and Fed's Austan Goolsbee stress the need for data-driven decisions while navigating the unpredictable impacts of U.S. tariffs.

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Reserve Bank of Australia's governor Michele Bullock speaks as she faces the House of Representatives Standing Committee on Economics at Australian Parliament House, Canberra, Australia, August 16, 2024. REUTERS/Tracey Nearmy/File Photo
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Austan Goolsbee, President and CEO of the Federal Reserve Bank of Chicago, speaks to the Economic Club of New York in New York City, U.S., April 10, 2025.  REUTERS/Brendan McDermid

Overview

  • RBA Governor Michele Bullock emphasized it is too early to determine the future path of interest rates due to the ongoing unpredictability of U.S. trade policies.
  • Bullock warned of an inevitable period of economic and financial market volatility but reaffirmed Australia's financial system is well-positioned to handle external shocks.
  • Market expectations for significant RBA rate cuts in May have softened following President Trump's decision to pause further tariff hikes, though uncertainty remains.
  • Austan Goolsbee, President of the Federal Reserve Bank of Chicago, highlighted the absence of a clear playbook for responding to the economic shocks caused by U.S. tariffs.
  • Goolsbee projected that U.S. interest rates could decline within 12 to 18 months, contingent on inflation moderation and economic stabilization.