IN summary, the Reserve Bank of Australia lowered its cash rate target to 3.85% from 4.10%, as expected, citing continued easing in inflation. While headline inflation may temporarily rise due to short-term factors, underlying inflation is forecasted to remain near the midpoint of the 2–3% target range. The RBA acknowledged ongoing global uncertainty stemming from tariff policy shifts and their potential impact on economic activity. Despite signs of recovery in private domestic demand and persistently tight labor market conditions, the Board views inflation risks as more balanced. With inflation now within the target band and upside pressures easing, the Board judged a rate cut appropriate to make policy less restrictive. However, it remains cautious and will closely monitor global and domestic developments to guide future decisions.
Reserve Bank of Australia is prepared to take further rate actions if necessary, noting that price increases have slowed. She described the latest move as a confident rate cut and revealed that the Board discussed a range of options, including a 50 basis point or 25 basis point cut, as well as the possibility of holding rates steady. Ultimately, the consensus favored a 25bps cut, which she called the right move for now, although further adjustments remain on the table. Bullock noted that businesses are reporting margin pressures, and while there was some support for a larger 50bps cut, it was not the dominant view. She emphasized that it’s unclear whether this cut will lead to a longer series of reductions and clarified that the RBA does not endorse current market pricing, which anticipates around 55bps of cuts by year-end. Bullock added that if inflation continues to decline, it would create room for additional rate reductions.
In other central banker talk:
ECB's Klaas Knot stated that the mid-term inflation outlook remains too uncertain to commit to a rate cut in June. While he acknowledged that upcoming ECB projections are likely to show lower inflation for 2025 and 2026, the long-term trajectory of inflation is unclear. This uncertainty is making it difficult to determine the appropriate course of monetary policy at this stage.ECB's Isabel Schnabel commented that disinflation remains on track, but new external shocks are complicating the policy outlook. She noted that while tariffs could have a short-term disinflationary effect, they introduce upside inflation risks over the medium term. Schnabel also highlighted that the Euro’s recent appreciation presents a strategic opportunity to strengthen its role as a global currency.ECB's Jose Luis Escrivá emphasized that the global financial environment is being shaped by heightened geopolitical tensions, evolving trade disputes, and increasingly unpredictable policy moves by the U.S. administration. He warned that these dynamics could pose risks to financial system stability. According to some scenarios, while higher tariffs may impact the U.S. more significantly, the Eurozone could also face secondary effects.US stocks are lower with the futures implying:
Dow Industrial average futures are unchanged versus the closeS&P index futures are implying a decline of -8.85 pointsNasdaq futures are implying a decline of -53 pointsGerman Dax, +.55%France's CAC, +0.63%UK FTSE 100, +0.67%Spain's Ibex, +1.52%Italy's FTSE MIB, +0.72
In the US debt market, yields are marginally lower. Yesterday, yields moved higher at the start of the day on the back of the Moody's downgrade, but reversed and closed little changed by the close.
2-year yield 3.968%, -1.5 basis points5-year yield 4.068%, -1.4 basis points10-year yield 4.469%, -0.6 basis points30-year yield 4.939%, -0.1 basis pointsIn other markets:
Crude oil down $0.16 or -0.30% at $61.95Gold is up $6.18 or 0.19% at $3236.41Bitcoin is trading dow, -$527 at $105,085 This article was written by Greg Michalowski at www.forexlive.com. Read More Details
Finally We wish PressBee provided you with enough information of ( The USD is modestly lower vs the 3 major currency pairs. The AUDUSD is the biggest mover. )
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