Overview

• The Reserve Bank of Australia lowered its cash rate to 3.85%, the second cut in 2025, signaling a shift to more accommodative monetary policy as inflation stabilizes.
• RBA Governor Michele Bullock highlighted the unprecedented economic uncertainty caused by Donald Trump's tariff policies, surpassing the combined impacts of COVID-19 and the Global Financial Crisis.
• The RBA's latest quarterly statement downgraded growth forecasts and modeled severe downside scenarios, including the potential for an Australian recession.
• Deputy Governor Andrew Hauser reported surprising optimism among Australian firms operating in China, citing opportunities to enhance competitiveness despite trade tensions.
• The global trade environment remains volatile, with the RBA monitoring the impacts of U.S. tariffs, weak domestic consumption, and external shocks on Australia's economic outlook.