From Yahoo Finance: 2025-06-02 21:31:00

Australia’s central bank considered a 50 basis point interest rate cut last month to combat global trade risks, but opted for a cautious 25 point cut. President Trump’s tariffs posed significant threats to global growth and Australian confidence. The board remains vigilant, with potential for further easing ahead.

The Reserve Bank of Australia debated holding rates steady at 4.10% but ultimately chose to lower them to 3.85%. Board members cited global uncertainty and the need to stimulate domestic inflation as key factors. Market expectations suggest another rate cut in July, with rates possibly reaching 2.85% or 3.10% next year.

Despite pressure to lower rates further, the board decided against a larger cut due to the resilient domestic economy and tight labor market. The minutes revealed a preference for cautious and predictable policy measures, with an eye on potential challenges should the need for reversal arise. Policymakers are monitoring inflation and household consumption closely.

The RBA’s decision to lower rates was influenced by global trade risks and the need to stimulate inflation. Core inflation has returned to the bank’s target range, but household consumption remains a concern. The board will continue to assess economic indicators and global uncertainty before making future monetary policy decisions.

Read more: Australia central bank pondered outsized rate cut in May, decided to be predictable