RBA Recap

• The Reserve Bank cut the cash rate to 3.85%, citing a surprising shift in risk assessment from “balanced” to “tilted to the downside,” marking a cautious pivot amid growing uncertainty.
• Rising global trade tensions, weakening consumer demand, and patchy domestic data are eroding the economic recovery narrative and prompting pre-emptive policy support.
• With core inflation back within the 2–3% target band, the RBA sees room to ease modestly without undermining its inflation-fighting credibility, keeping the door open for further cuts if needed.

The Australian Economy

• Inflation continues to ease, labour market tightness is moderating, and households are pulling back, creating a clearer path for further policy easing.
• Business sentiment and spending intentions are weakening, while consumer confidence remains low despite modest gains, pointing to a more cautious domestic outlook.
• Global trade tensions are rising, and rate cuts are on the table — how far will policy have to go to keep momentum alive?

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