The Reserve Bank of Australia (RBA) has opted to keep interest rates steady, maintaining a cautious approach in light of ongoing global economic uncertainties. This decision is influenced by persistent geopolitical risks and trade tensions, particularly those involving the US.

Despite these external pressures, Australia’s economy has remained relatively stable, supported by consistent consumer spending and low unemployment. While economic growth is not particularly strong, current conditions do not necessitate immediate rate cuts. The job market remains tighter than usual, though early indications of a slowdown are starting to emerge.

One of the main factors behind the RBA’s decision is the unpredictability of global trade. US tariffs have disrupted international markets, and while Australia has not been significantly affected yet, its strong trade ties with China make it vulnerable to any economic downturn in the region.

Initially, financial markets had anticipated up to four rate cuts in 2025, but expectations have now shifted to just two, which are likely to occur later in the year.

For the housing sector, the RBA’s stance means no immediate changes. Following a brief decline in late 2024, property prices rebounded in early 2025 and have continued to climb, albeit at a slower pace. The ongoing shortage of housing supply remains a key factor underpinning price stability, despite broader economic uncertainties.

Looking ahead, the focus is now on what might prompt the RBA to cut rates further. A continued softening in the labour market could be a key driver. However, for now, the central bank remains cautious, closely assessing both domestic conditions and global economic developments.