RBA Stands Firm Amid Global Rate Cuts

Summary:
The Reserve Bank of Australia (RBA) will not be swayed by recent interest rate cuts by other central banks, according to newly appointed deputy governor Andrew Hausen. Despite similar struggles with inflation, Hausen emphasized that Australia’s economic conditions differ from those of Canada and Europe, which recently reduced their rates. Canada cut its overnight rate to 4.75% after inflation dropped to 2.7%, while the European Central Bank lowered its rate by 25 basis points to 3.75%. Hausen noted that underlying inflation in Australia remains higher, with April’s rate at 4.1%. Despite calls for earlier rate cuts to prevent recession, the RBA is expected to maintain its current stance, with no policy easing anticipated until May 2025. GDP growth in Australia was minimal in the March quarter, marking the weakest annual growth since the early 1990s recession, excluding the pandemic.