Trump’s economic impact may delay RBA rate cut

Trump’s Economic Impact May Delay RBA Rate Cut

Mark Stevenson, Managing Director at Bell Partners Finance (now Evolve Lending & Finance), was featured in Broker Daily in February 2025 raising the possibility that uncertainty surrounding US President Donald Trump’s economic policies could delay the RBA’s long-anticipated rate cut, even as markets were widely pricing in a reduction at the February meeting.

With the cash rate at 4.35 per cent since November 2023, financial markets expected the RBA to cut on 18 February. Mark acknowledged the pressure to move but said he would personally prefer the board wait one more meeting. Trump’s tariff plans and trade war were placing pressure on the Australian dollar, which would weigh on the RBA’s ongoing effort to contain inflation. The unpredictability of the new administration, which had already produced significant policy surprises in its early weeks, including a plan for the US to take over Gaza, meant there was a reasonable case for the RBA to defer until its late March to early April meetings and get a clearer picture of how global economic conditions were evolving.

Also contributing to the case for caution were domestic factors including government spending aimed at easing cost-of-living pressure, which added complexity to the inflation outlook. Bendigo Bank’s chief economist David Robertson echoed some of those concerns, pointing to a resilient labour market with unemployment around 4 per cent, increased demand from federal and state spending and recent tax cuts, and downward pressure on the Australian dollar from US tariffs. Robertson expected only a shallow easing cycle ahead. Mark’s own summary was measured: it was still a close call, the RBA was under real pressure to cut, but staying on hold was defensible.

If you are monitoring the rate environment and want to know whether your current loan is as competitive as possible, contact Evolve Lending & Finance for a review.