The RBA is closely monitoring the potential impacts of these tariffs on Australian GDP and inflation, noting that retaliatory measures could pose significant downside risks to global growth.

Economists have warned that such tariffs could lead to increased import prices and supply chain disruptions, ultimately raising the overall price level in Australia.

The central bank is balancing the need to combat inflation with the goal of maintaining low unemployment, a challenging endeavor given current economic conditions.

Amid these challenges, the RBA faces a difficult task in managing interest rates while navigating a slowing economy and rising prices.

Looking ahead, financial markets are predicting a possible interest rate cut in May 2025, contingent on updated economic conditions.

In its meeting minutes, the RBA highlighted the risks to Australian inflation stemming from the US tariff policies, indicating uncertainty about their broader economic implications.

On April 1, 2025, the Reserve Bank of Australia (RBA) decided to maintain the official cash rate at 4.1%, reflecting a cautious stance amid global trade uncertainties.

The RBA expressed concerns about rising tariffs and their potential economic impact, particularly in light of US President Donald Trump's announcement of tariffs affecting nearly 75 countries.

Despite the uncertainties, the RBA believes it is not yet appropriate to react to potential risks that could affect economic outcomes in either direction.

However, the RBA noted that financial pressures on borrowers have eased somewhat, with mortgage arrears stabilizing at pre-pandemic levels.

Most borrowers are maintaining significant liquidity and equity buffers, which allows them to manage their mortgage payments effectively.

The RBA reiterated that its top priority remains returning inflation to target, with future decisions guided by incoming economic data and risk assessments.