Bad information for Aussies hoping for an rate of interest reduce – and why Donald Trump is guilty for taking election sweetener off the desk for Albo
Anthony Albanese is set to miss out on an election campaign interest rate cut as Donald Trump’s import tariffs block relief for home borrowers.
Economists are almost universally expecting the RBA cash rate to stay on hold at 4.1 per cent on April 1, following the central bank’s two-day meeting this week.
This would deprive the average borrower of $100 in repayment relief.
Compare the Market’s economic director David Koch said Donald Trump‘s new 25 per cent tariffs on Australian agricultural and pharmaceutical exports, coming into effect on April 2, would stop the RBA from providing relief to borrowers.
‘Remember, financial markets and central bankers hate uncertainty and there’s a lot of that right now in the United States,’ he said.
‘Virtually every day we wake up and Trump has announced new tariffs or sanctions.
‘The Reserve Bank’s going to be really cautious because tariffs push prices up, and that feeds inflation.’
The Trump administration’s widespread tariffs, without exemptions, risks putting up consumer prices, as some nations engage in a trade war with the US.
Anthony Albanese is set to miss out on an election campaign interest rate cut as Donald Trump’s import tariffs block relief for home borrowers (pictured is the Prime Minister campaigning in Canberra)
American-made goods could become more expensive if tariffs are slapped on imported components used in the manufacturing.
Headline inflation is now at 2.4 per cent which is in the middle of the RBA’s 2 to 3 per cent target, thanks to the federal government’s $75 quarterly electricity rebates that are now being extended until the end of 2025.
Before the Budget announcement, the Reserve Bank had been expecting headline inflation, also known as the consumer price index, to climb to 3.7 per cent.
With the rebates now expiring on December 31 instead of June 30, Treasury sees the CPI rising to three per cent by June 2026.
A Finder survey of 34 economists at 32 or 94 per cent of them predicting rates staying on hold on Tuesday.
More comprehensive March quarter isn’t due for relief until April 30, which means a rate cut on May 20 is more likely.
A quarter of a percentage point rate cut in May would take the RBA cash rate back to 3.85 per cent for the first time in almost two years.
Until the next cut, Mr Koch said borrowers could negotiate a better deal with their bank.
Donald Trump ‘s new 25 per cent tariffs on Australian agricultural and pharmaceutical exports, come into effect on April 2
Compare the Market’s economic director David Koch said the Trump tariffs could stop the Reserve Bank from cutting interest rates on April 1
‘We can’t rely on the Reserve Bank to deliver mortgage relief. That means we have to be more vigilant ourselves to make sure we’re getting a good deal,’ Mr Koch said.
‘Homeowners who have been with the same lender for a number of years need to make sure they are at a rate that is commensurate with what new customers are getting.
‘Compare what other lenders are advertising to see what else is out there. If your lender won’t match the market leading rates, it might be time to switch.’
The futures market is expecting three more rate cuts during the coming year which would take the RBA cash rate during the coming year.
This would see it fall to 3.35 per cent for the first time since March 2023.
During the last election campaign, the Reserve Bank put up interest rates in May 2022 for the first time since 2010.
Former prime minister Scott Morrison had called the election three years ago when the RBA cash rate was still at a record-low of 0.1 per cent and inflation was running at 6.1 per cent, after Russia’s Ukraine invasion pushed up petrol prices.
