Overview

• The RBA board debated a 50 basis point cut at its May 20 meeting but chose a 25 basis point reduction to 3.85 percent for a predictable approach
• Officials flagged that US President Donald Trump’s elevated tariffs pose significant risks to global growth and Australian business and consumer confidence
• Assistant Governor Sarah Hunter said higher US tariffs are disinflationary for Australia by lowering import prices even as core inflation eased to 2.9 percent in the first quarter
• Board members cautioned that a rapid 50 basis point cut could necessitate a policy reversal if economic conditions remained resilient
• Markets now assign about a 70 percent probability to further easing at the July 8 meeting, with futures pricing rates to bottom around 2.85–3.10 percent by early next year