👉 Background: The Reserve Bank of Australia (RBA) is Australia’s central bank. It sets the cash rate, which is the interest rate that banks pay to borrow funds from other banks. When the RBA’s cash rate goes up, the interest rate on your home loan typically goes up; when cash rate goes down, the interest rate typically goes down. In February, the RBA cut the cash rate by 0.25% down to 4.10%, and homeowners were celebrating because it was the first cash rate cut since November 2020.

‍👉 What happened: The RBA crew have met yesterday for the second time in 2025. Despite the date being April Fool’s Day, the RBA weren’t clowning - they decided to sternly and seriously pause the cash rate at 4.10%.

‍👉 What else: The RBA noted that there is a lot of change happening in the world right now - particularly with Donald Trump’s global tariffs expected to be implemented imminently aka “Liberation Day”. The RBA wanted to see the impact of these tariffs. The biggest fear for many economists is that these huge tariffs could lead to global “stagflation”.

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‍What's the key learning?

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‍💡Stagflation is when a country suffers from stagnant economic growth and high inflation at the same time. When wages aren’t rising and jobs aren’t booming, you’d expect economic growth to slow but during stagflation, prices keep rising despite a slow economy.

💡Right now, global markets are shocked by the potential impact of Trump’s tariffs. Investors fear that Trump’s tariffs will make that stagflation-nightmare real: it might raise import prices (hi again, inflation) and may slow down global trade (bye-bye growth).

💡 We’ve already seen the caution in the sharemarket with the Nasdaq100 down more than 8% so far this year. And even the ASX200 down nearly 3.5% this year so far. So time will tell whether these tariffs really turn out as bad as the markets are fearing.