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3w ago

RBA Warns U.S. Tariffs Threaten Global Stability and Australia's Economic Outlook

Australia's central bank highlights risks from U.S. trade policies, including potential spillovers from China's slowdown and vulnerabilities in global financial markets.

Pedestrians walk past the Reserve Bank of Australia building in central Sydney, Australia, February 10, 2017. REUTERS/Steven Saphore/File Photo
Donald Trump holds a list of tariffs by country.

Overview

  • The Reserve Bank of Australia (RBA) warns that newly announced U.S. tariffs, including a 10% baseline levy and higher rates on Chinese imports, could destabilize global financial systems.
  • The RBA identifies three critical risks: compressed risk premia in equity markets, financial vulnerabilities in China, and heightened operational risks from geopolitical tensions.
  • China's economic slowdown, exacerbated by U.S. tariffs, could negatively impact Australia's trade and financial stability, particularly through reduced commodity demand.
  • Australian households and businesses are in stronger financial positions than in previous years, with mortgage-related vulnerabilities stabilizing at pre-pandemic levels.
  • The RBA urges caution in lending practices to prevent over-leveraging, as easing financial conditions could inflate housing risks and increase debt levels.