iscover
iscover 
The Reserve Bank of Australia (RBA) may hold off on a long-anticipated interest rate cut due to uncertainty over the economic impact of Trump’s return to office, according to a finance brokerage.
Bell Partners Finance managing director Mark Stevenson said that while financial markets expect the RBA to lower the cash rate from 4.35 per cent on 18 February, factors, including Trump’s policies, could influence the central bank’s decision to remain on hold, as it has since November 2023.
“I’d actually like to see them hold out for maybe one more meeting,” Stevenson said.
“The impact of Donald Trump and his trade war with plans to lift tariffs puts pressure on the Australian dollar and that will weigh on the RBA’s decision and its long-running battle to contain inflation.”
Stevenson added that the unpredictability of Trump’s policies, particularly his recent proposals, could prompt the RBA to hold off on a rate cut until its meetings in late March or early April.
“Who knows what else could come from Trump in the weeks ahead after his latest bombshell plan for the US to take over Gaza?”
While inflation has been easing, Stevenson noted that the RBA will still need to consider other factors such as government spending aimed at alleviating cost-of-living pressures on households.
“It’s still a pretty close call for the RBA,” he said.
“They are under a lot of pressure to lower the cash rate, but they would be justified in staying on hold.”
This analysis follows comments by Bendigo Bank’s chief economist, David Robertson, who also pointed out that while a rate cut at the RBA’s meeting on 17–18 February is probable, there are several factors preventing it from being a certainty.
Robertson outlined three key issues:
- A strong labour market, with the unemployment rate holding steady at around 4 per cent.
- Increased demand from federal and state funding, as well as recent tax cuts, though business investment has remained sluggish.
- Pressure on the Australian dollar due to Trump’s tariffs, which have seen the currency fall to five-year lows.
“While further falls in our exchange rate will have some impact on inflation, and appear likely, these three factors help to explain why we continue to only expect a shallow easing cycle ahead,” Robertson said.
[RELATED: Why rate cuts might not happen]
