👉 Background: The RBA brains trust have put their heads together three times this year already. The outcome? Two rate cuts so far in 2025… with the cash rate falling from 4.35% down to 3.85%.

👉 What happened: With the RBA meeting again on Monday and Tuesday this week, the financial markets gave a 97% chance of a rate cut. In fact, just 4 out of 36 economists predicted the decision to keep rates on hold. The reason? Annual trimmed mean inflation, the favourite measure of the RBA, had slowed to 2.4%… which is within the RBA’s targeted range of 2-3%.  

👉 What else: But the RBA doesn’t want anyone knowing its next move… so it PAUSED the cash rate at 3.85%. The RBA Governor said that the “case was not established” for another rate cut. The RBA pointed to the US tariffs which are still unknown as well as the follow-on policies that come out of these tariffs from other countries like China — aka Australia’s biggest trading partner.

What's the key learning?

💡When it comes to interest rates, markets can speculate - but central banks hold the cards. Even if economic data shows a slowdown, the RBA doesn’t want to jump the gun on rate cuts… because this could risk reigniting inflation.

💡Despite positive signs around inflation, we know that Donald Trump’s tariffs could change the whole world’s economy...in an instant. That’s why the RBA is waiting for more consistent evidence before making a cut.

💡Interestingly, not all RBA Board Members agreed. In fact, 3 Board Members voted for a cut, while 6 voted for a pause. So, in this case, the RBA said it wants "a little more information" before cutting again. It's not a "no".. it's more of a “maybe soon”.