Rates remain on hold as global uncertainties persist

The Australian economy continues to show unexpected resilience, with unemployment remaining relatively low and consumer spending maintaining modest growth. The economy is not performing exceptionally well, but we’re not seeing the significant deterioration that would warrant immediate rate cuts. Labour market conditions remain tighter than historical norms, though we are seeing early signs of cooling.

A primary factor in today’s decision is the heightened global economic uncertainty. The implementation of tariffs by the US has created ripple effects across global trade networks. While tariffs on Australia are unlikely to have a major economy impact at this point, our heavy reliance on China as a trading partner means we’re particularly vulnerable to any Chinese economic slowdown.

The markets, which had previously priced in up to four rate cuts for 2025, have now moderated their expectations to just two potential cuts later this year.

For the housing market, today’s decision maintains the status quo. After the brief downturn in late 2024, house prices rebounded in January 2025 and have continued their upward trajectory, albeit at a more moderate pace.

The resilience of Australia’s housing market reflects the fundamental undersupply that continues to characterise our market. While global economic challenges create uncertainty, the structural factors supporting Australian property prices remain firmly in place.

Attention now turns to the conditions that might trigger the RBA’s second cut this cycle. Further softening in the labour market could provide this impetus. For now, the RBA maintains a position of patience and caution, considering both domestic conditions and the increasingly complex global economic landscape.