The Reserve Bank has expressed caution regarding potential future cash rate cuts, emphasizing that the recent decision to lower the official interest rate level is not a commitment to further reductions. This stance was outlined in the minutes from the bank’s latest board meeting, which were released on Tuesday. The minutes shed light on the RBA board’s uncertainty about whether inflation could be brought back to the target range with a lower cash rate, thereby dampening hopes of mortgage holders expecting additional quick relief in lending rates. This development also diminishes the likelihood of an additional pre-election rate cut.

Policy easing, generally referring to rate cuts, was seen as uncertain by the members, a view supported by inflation forecasts based on the market path. In February, the RBA reduced the cash rate by a quarter point to 4.1%, marking the first cut since the early days of the pandemic. Traditionally, rate adjustments are part of a series, suggesting that this could have been the beginning of a new cycle. However, the RBA’s decision to cut rates due to concerns about the adverse economic effects of higher borrowing rates did not guarantee further reductions. The board emphasized that their decision at this meeting did not commit them to reducing the cash rate target in subsequent meetings.

This cautious approach aligns with RBA Governor Michele Bullock’s stance, who has been cautious against expectations of a series of cuts. Bullock has been monitoring the jobs market closely, which has shown resilience and might not require a rate cut stimulus. Additionally, she noted that the economic outlook is uncertain due to Donald Trump’s tariffs policy, including an additional levy on China. These tariffs have caused volatility in global equity markets, complicating forecasting. Currently, the market anticipates a 14% chance of another 25 basis point decrease at the next RBA meeting on 1 April, as indicated by the ASX’s rate indicator.

Source: https://www.theguardian.com/australia-news/2025/mar/04/rba-board-minutes-more-interest-rate-cuts-unlikely