Today's a moment of truth for the Reserve Bank board, and the government. At 2.30pm we'll know whether the RBA thinks the economy is weak enough to warrant the boost of an interest rate cut to another, even lower, record low. And if the decision was finely balanced up to the weekend, Donald Trump’s shock threat to lift tariffs on Chinese imports from 10% to 25% this Friday might tip the Reserve Bank’s hand.
The RBA has been watching Trump’s trade war threats and actions for more than a year. In the minutes of the April meeting, the RBA said:
Recent trade talks between the United States and China had taken on a somewhat more positive tone. However, the United States had also said it would consider imposing restrictions on automotive imports, which would affect large car exporters, including Germany and Japan.