Treasurer Hints at Multiple Rate Cuts as Market Volatility Grows

If you're a mortgage holder hoping for some relief, there might be a light at the end of the tunnel — and surprisingly, it could be thanks to Donald Trump’s latest trade war.

Treasurer Jim Chalmers is pointing to recent market chaos caused by Trump's new tariffs, saying it could actually help push interest rates down here in Australia. He mentioned that bond markets are now predicting the Reserve Bank of Australia (RBA) could cut rates up to four times this year. There’s even chatter about a dramatic 50 basis point cut next month.

But before anyone starts celebrating, investment expert Jun Bei Liu has poured a bit of cold water on the idea. Speaking on Today this morning, she said that kind of sharp move just isn’t how the RBA tends to roll.

“Look, we will probably get a rate cut — it looks like it’ll be about 25 basis points,” she said. “But 50? That’s very unlikely. Even with all the global share market volatility, it’s just not how the RBA works.”

Still, the economic vibes are definitely off right now. Share markets and currencies have been all over the place lately, and Australia’s feeling the ripple effects. Chalmers is staying optimistic, though, saying our economy is well-placed to weather the storm.

“We’re seeing the fallout from a bunch of poor decisions around tariffs,” he said. “Now the world’s trying to figure out what that means for their own economies.”

That said, the Treasurer did warn Aussies to expect a few bumps ahead. New Treasury data shows these US tariffs could knock 0.2% off our GDP by the end of next year. By 2030, it’ll be more like 0.1%. And yes, we’re also looking at a slight uptick in inflation — about 0.2 percentage points — as the cost of imported goods rises.

On a more hopeful note, Liu said the local share market is expected to bounce back a bit today after taking its biggest single-day hit since 2020.

“But this isn’t COVID,” she said. “Now we’ve got Donald Trump … and things can change very quickly.”

So, if you’ve got a mortgage, don’t go popping the champagne just yet — but maybe keep it chilled, just in case.