The Reserve Bank of Australia (RBA) will likely cut its key rate more than previously anticipated in response to the potential impact of American tariffs on consumer spending and business investment, ANZ Research said in a Friday note.
Analysts now expect the RBA to lower the cash rate by 25 basis points at each of its meetings in May, July, and August, as opposed to only one easing seen in the firm's previous assessment.
While markets are still assessing the full scale of the Trump administration's new tariff policy, the bigger risks for Australia relate to domestic consumption and business confidence, said ANZ Research.
"[A more] aggressive RBA easing now seems more likely than not. Indeed, we would not rule out a 50bp cut in May, if sentiment sours and the global growth outlook deteriorates sufficiently," said ANZ Research.
Additional rate cuts would also offset any potential impact of waning confidence on consumer spending and business investment, the firm added.
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