"It is welcome that progress on inflation has allowed the RBA to continue easing rates in today's monetary policy decision. But we should also be cautious regarding the broader context of global economic uncertainty," said Innes Willox, Chief Executive of national employer association the Australian Industry Group.
"Households and businesses alike can be relieved that underlying inflation is now forecast to stay within the target band. It took nearly four years – and a little help from the taxpayer in the form of household energy subsidies – but the pernicious effects of high inflation look to now be behind us.
"A 25 basis point cut in the cash rate will provide some much needed relief for the economy. However, declarations of a 'soft landing' are premature. The global economic context Australia now faces is highly uncertain with many risks to the downside.
"Trump's trade wars loom over the global economy. While temporary suspension of tariffs is welcome news, it simply implies less rather than no damage from this paroxysm of protectionism. The RBA notes that uncertainty alone can itself slow economic activity if households and businesses defer major decisions.
"The RBA has downgraded its forecast for growth, inflation and employment through to the end of 2026 due to these global downside risks.
"Our own economic performance has been far from stellar, with growth, business investment and household spending all recently weak. Recent OECD research found that Australian real household incomes fell by 1.8% in 2024 – the worst result of any OECD economy.
"Meanwhile, many of our structural economic problems – of stagnant productivity, chronic housing and skills shortages, and rising public debt levels – remain in place.
"While we should welcome the good progress made in controlling inflation, a new wave of global economic challenges now awaits us. They warrant an immediate focus on growth and productivity oriented reforms from the new federal government," Mr Willox said.
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