Reserve Bank of Australia (RBA) Governor Michele Bullock signaled a cautious approach to future interest rate decisions, saying it is “too early” to gauge the full impact of former U.S. President Donald Trump’s trade war on the economy. Her remarks, delivered Thursday evening in Melbourne, downplayed speculation of an imminent double rate cut in May.
Speaking at the Chief Executive Women’s annual dinner, Bullock stressed that the central bank is wary of fueling uncertainty in an already volatile environment.
“We are mindful of not adding to the uncertainty, and to that end, it’s too early for us to determine what the path will be for interest rates,” she said.
Bullock acknowledged recent global developments, including Trump’s surprise announcement of a 90-day pause on escalating “reciprocal” tariffs—excluding China. The move spurred a dramatic rally on Wall Street and lifted global markets, with Australia’s S&P/ASX 200 surging 4.5% and the Australian dollar climbing nearly two U.S. cents to US61.5c.
Despite the market optimism, Bullock warned that turbulence remains ahead. “Inevitably, there will be a period of uncertainty and adjustment,” she said, emphasizing the need for patience while assessing how tariffs could affect global demand and supply.
The unexpected pause in Washington’s tariff strategy also prompted Deutsche Bank to retract its prediction of a dual rate cut by the RBA on May 20, just two days after issuing the forecast.
Bullock indicated that the central bank is closely monitoring how uncertainty is influencing household and business decisions in Australia. “Financial market and economic volatility can be expected as this process unfolds,” she said.
Reflecting on her rise through the traditionally male-dominated central bank, Bullock noted that while Trump’s trade tensions pose challenges, they have not triggered the level of disruption seen during the Global Financial Crisis.
She reassured that Australia’s financial system remains resilient. “We are carefully considering several factors including the response of our trading partners, additional counter-responses from the US, the response of our exchange rate, and adjustments in other financial markets,” she said.
As the RBA prepares for its next policy meeting on May 19-20, Bullock emphasized the need for detailed analysis. “There are a lot of moving parts,” she concluded.
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