RBA’s Hunter cautious on further rate cuts, Treasurer warns of trade war’s indirect impacts

RBA Chief Economist and Assistant Governor Sarah Hunter reinforced the central bank’s cautious stance on further rate cuts. She emphasized in a speech today that while the February cut was deemed an appropriate time to “take some restrictiveness away”, the Board were “more cautious than the market about prospects for further easing”.

Hunter highlighted that US policy settings and their impact on the global economy as “one of the things we are focused on right now”.

She added that policy decisions are always made in uncertain environments, where the baseline forecast is just one of many possible scenarios rather than a strict roadmap for future moves. The link between economic forecasts and rate decisions is “not mechanical”.

Separately, Australian Treasurer Jim Chalmers acknowledged that the direct impact of US tariffs on Australia is “concerning, but manageable”. But he warned that the larger risk lies in a broader global trade war. He described the current environment as a “new world of uncertainty”, where the spillover effects from rising trade tensions could have far-reaching consequences for Australia’s economy.

Full speech of RBA’s Hunter here.