MNI BRIEF: RBA Doubtful Over Tariff Impact On GDP - Minutes

The Reserve Bank of Australia monetary policy board doubted increasing global tariffs would have a significant impact on domestic economic growth, despite acknowledging this could change, according to the published minutes from the April 1 decision. 

“It is important for monetary policy to be forward-looking,” the board stated. “However, the information to hand did not imply a significant change in the outlook, despite the substantial level of uncertainty.” 

The implementation of U.S. reciprocal tariffs on April 3, and the subsequent rollback on all trading partners expect China, resulted in significant market volatility and saw traders price in a 50 basis point cut to the 4.1% cash rate at the RBA’s May 20 meeting. That has since been paired back to a 35bp cut.

“The extent to which these international developments would affect the Australian economy was a further source of uncertainty and depended on a range of factors," the board argued. "Assuming the global tariffs announced so far and that the Australian Government did not impose retaliatory tariffs, a model-based scenario showed that the effects on GDP growth and inflation in Australia could be relatively modest.”