RBA Chief Calls for Patience Amid Trump Tariff Turmoil

Reserve Bank boss Michele Bullock has taken a calm and cautious tone in the face of growing global market chaos, telling Australians to be patient as the fallout from Donald Trump’s latest trade war plays out.

In her first public speech since Trump dropped a bombshell round of tariffs on imports into the US, Bullock said it’s still too early to know exactly how the economic turbulence will ripple across the globe — and she’s not ready to commit to slashing interest rates just yet.

“It will take some time to see how all of this plays out,” she told a crowd at the Chief Executive Women annual dinner in Melbourne last night.“The added unpredictability means we need to be patient as we work through how all of this could affect demand and supply globally.”

Trump’s massive “reciprocal” tariffs — including eye-watering import taxes of up to 49% on goods from dozens of countries — have shaken global stock markets and sparked speculation the Reserve Bank of Australia would step in quickly with a rate cut. At one point, traders were betting 100% on a rate drop at the RBA’s next meeting in May.

But after Trump unexpectedly paused some of the more extreme measures for 90 days — while still hammering China with 125% tariffs — those expectations eased. Australia and others are still facing a 10% “baseline” tariff for now.

Some of the big banks aren’t backing down on their predictions, though. NAB is tipping a sharp 50 basis point rate cut next month, bringing the cash rate down to 3.6%, with even more cuts coming throughout the year. By February, they reckon it could drop all the way to 2.6%. Meanwhile, CBA, Westpac and ANZ are forecasting a smaller cut of 0.25%.

But Bullock isn’t rushing to match those predictions. She said the RBA is watching how households and businesses respond, and keeping a close eye on both domestic and international financial conditions.

“We are mindful of not adding to the uncertainty,” she said.“It’s too early for us to determine what the path will be for interest rates.”

Her main message? Steady on. The Reserve Bank’s priorities — keeping inflation in check and people employed — haven’t changed.

Bullock also pushed back on comparisons to the 2008 global financial crisis, saying we’re not in the same boat this time around.

“First, we’re not currently seeing the same degree of impact as previous market events like in 2008,” she said.“And second, the Australian financial system is strong and well placed to absorb shocks from abroad.”

Her comments came just a day after an emergency meeting with Treasurer Jim Chalmers, who echoed the RBA’s mix of confidence and caution.

“It’s a really good opportunity for us to confer with, compare notes with and coordinate our efforts with the regulators,” Chalmers said.“We are confident that we can weather these global conditions, but we’re not complacent.”

So, no rate cut promises yet — but the RBA is watching the situation closely. Stay tuned.