Donald Trump’s rates could affect Australians from several age groups differently, since treasurer Jim Chalmers indicates that multiple interest rates are likely.
During a press conference on Monday, Chalmers said that the increasing commercial tensions had thrown a dark shadow on the global economy.
After the tariff announcement of the president of the United States last week Including Australia, there has been a .
The Australian sharing market received its greatest success in more than a year, with the In the first minutes of commerce today.
Chalmers noticed volatility and said the value of the Australian dollar had been bouncing.
But Chalmers said this reflected the market expectation that the next reduction in the interest rate of the Reserve Bank (RBA) could be as large as 0.5 percent.
“We are seeing a very substantial volatility now in the global stock markets and in our own markets,” he said.
“That is largely a reflection of people’s concerns about the Chinese economy, but it also reflects the fact that markets now expect about four interests of interest rates in Australia this calendar year.
“The market awaits multiple cuts of interest rates during the year as of May.”
RBA governor Michele Bullock is expected to deliver additional interest rate cuts in 2025 after maintaining the cash rate in April. Fountain: AAPA / Lukas Coch
American tariffs have increased the fears of a recession, and RBA is expected to reduce rates to stimulate growth while juggling with its mandate to maintain inflation under control.
Why would RBA reduce interest rates?
Dr. Zac Gross, a professor of Economics at the University of Monash, said that the RBA will seek to combat the flow effect of Trump rates in Australia, which is expected to decrease inflation and lead to the increase in unemployment.
“Lower inflation [and] greater unemployment [are] A textbook case to reduce interest rates, “he told SBS News.
While tariffs will increase inflation in the US. Due to the additional tax of the goods that enter the country, it explains that the impact for Australia can be deflationary.
The high rates in countries like China and Vietnam will block them from the US market and force them to reorient their cheap products to places like Australia.
Meanwhile, direct impacts on industries such as the Australian beef sector, which will be subject to the 10 percent rate, could increase unemployment.
“Then, to the extent that we see greater unemployment in companies and cities that focus on the beef market, that will be another reason why the RBA will be more likely to reduce interest rates,” Gross said.
In general, he said, “bad will will exceed good” for Australians.
What Australians will be hit ‘quite hard’?
Gross said that anyone with “exposure to light to the sharing market will be disproportionately affected.”
He explains that young investors are more likely to invest in shares, while older Australians generally change their exposure to safer assets such as government or effective bonds.
“Those in their 50 and 60 years, are probably the worst because they probably have high exposure to actions, since they are not in their 80 or 90 years,” Gross said.
“But they don’t have so much time in the workforce, so having a 10 percent drop in the value of their actions will probably hit them quite hard.”
He said that impacts on the retirement sector should be “quite limited.”
“Young people who are more exposed should have a lot of time to invent losses,” he said.
Last week, the governor of RBA, Michelle Bullock, announced that interest rates would remain waiting. Your next decision is expected on May 20.
In February, RBA reduced rates for the first time since 2020, reducing the rate of 4.35 percent to 4.1 percent.
The relief followed 13 consecutive walks since May 2022.
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