The Reserve Bank of Australia maintained interest rates as scheduled, but concerns about tariffs clouded the outlook for rate cuts.

On Tuesday, the Reserve Bank of Australia kept the benchmark interest rate unchanged, with RBA Governor Bullock declining to provide guidance for the May policy meeting as the committee waits for more evidence to show that inflation is continuing to fall towards the target level amid increasing uncertainty. On Tuesday, the RBA kept the cash rate at 4.1%, in line with expectations. Bullock told reporters that the new Monetary Policy Board "has not had a discussion about cutting rates," and added that the committee did assess global downside risks, with the decision to hold being a consensus. She stated at a press conference in Sydney that forward indicators show the "labor market remains tight." The committee is cautious about low unemployment potentially putting upward pressure on wages and exacerbating the possibility of inflation. The Australian dollar continued to rise, while the policy-sensitive Australian 3-year government bond yield rose one basis point to 3.71%, erasing earlier losses as Bullock eased market expectations of a rate cut. Traders expect a 72% chance of the RBA easing monetary policy at the May 19-20 meeting, down from around 80% prior to the decision. Gareth Aird, head of the Australian economic research department at the Commonwealth Bank of Australia, stated: "The Board deliberately didn't provide any forward guidance. It will depend on economic data and potential developments in the global economy, which will impact future monetary policy decisions." Meanwhile, as the RBA kept rates unchanged, Trump stated that he may announce tariff details on the evening of April 1st or April 2nd. Concerns have been raised about the uncertainty surrounding Trump's tariff plans, with worries that they may disrupt supply chains and raise prices. Bullock reiterated that tariffs have not yet had an impact on prices, and what is important for Australia is the impact on major trading partners such as China. She added that if commodity prices are affected, the exchange rate could serve as a buffer. Trump's plan adds uncertainty to the already cloudy global outlook. Federal Reserve officials have warned that tariffs may impede recent progress on inflation. Bullock was asked if the RBA would prioritize price stability or economic growth if tariffs boost prices and weaken the economy. She mentioned the situation of stagflation in the 1970s, where inflation must be controlled, while also focusing on employment. Domestic data in Australia is mixed - monthly data shows a unexpected decline of 52,800 in employment in February, with full-time positions decreasing by 35,700, far exceeding the market expectation of an increase of 30,000. Inflation indicators are currently within the RBA's target range of 2-3%. Meanwhile, consumer spending has rebounded from last year's lows, and national house prices hit a historic high in March. Economist James McIntyre from Bloomberg stated: "Despite the unexpected drop in employment in February, the tight labor market provides room for action - if global risks require a policy response." Australia is in the midst of a tense election period ahead of the May 3rd vote. According to current opinion polls, the most likely outcome is a hung parliament where neither of the two major parties will have a majority. In this scenario, they would need to negotiate with independent MPs to form a government. Bullock mentioned that the ongoing election campaign doesn't influence the decision to keep rates unchanged. When asked about pressure from Treasurer Jim Chalmers to cut rates, Bullock stated that the committee has not faced any "particular political pressures." Bullock noted that when the RBA meets in May, the impact of tariffs may be clearer, as they will see the quarterly inflation data - the most comprehensive data - and will update staff forecasts.