RBA interest rate cut predicted to protect against Trump tariff fallout
RBA RATE DECISION, TRUMP TARIFF CHAOS
While the Erin Patterson guilty verdict yesterday has dominated coverage in every single publication (domestically and internationally) overnight, this morning we’ll be focusing on political and economic matters.
This afternoon brings us the latest decision from the Reserve Bank of Australia’s (RBA) rate-setting board. The decision is due at 2.30 pm AEST, with a press conference scheduled for an hour later.
As mentioned yesterday, the major banks and the financial markets are predicting a quarter of a percentage point cut to 3.6%. As the Nine papers put it this morning: “The Reserve Bank is poised to deliver its fastest cut in interest rates since the early days of the COVID-19 pandemic as it seeks to protect the economy from the fallout of US President Donald Trump’s latest tariff war and encourage households to open their wallets.”
My colleagues Bernard Keane and Glenn Dyer pointed out on Monday that the July 9 deadline for Trump’s tariff war has been “TACOed” this week, with the White House announcing an extension until August 1.
The Nine report says the potential fallout from the tariffs (in whatever form they eventually take), lower inflation (which dropped to 2.1% in May) and sluggish economic growth have caused the expectation among most of a rate cut today and potentially another next month.
Callam Pickering, Asia-Pacific chief economist for the job site Indeed, is quoted as saying: “We believe the RBA will need to cut rates at least another couple of times this year to provide sufficient support to households and businesses while ensuring that the unemployment rate remains low and we avoid recession. We expect the RBA to cut rates this week, with another cut at either their August or September meetings.”
Meanwhile, Betashares’ chief economist David Bassanese suggested the central bank could wait until the next quarter’s inflation report, due at the end of August, to have a better understanding of the state of the economy.
“It might also help to hold off the impending house price boom for at least another month. It would also give them a bit more time to assess what Trump does with tariffs as the July 9 deadline passes,” Bassanese said.
On the theme of the impact of the US tariffs, The Australian Financial Review reports the Productivity Commission has said the tariffs “could, surprisingly, have a slight positive direct impact on Australia’s economy, although this could be negated by the uncertainty from the tariffs deterring business investment around the world”.
The Nine report highlights the commission’s suggestion that Trump’s tariffs could lead to a 0.4% lift in Australia’s GDP as things such as machinery and manufacturing facilities are moved out of the US to countries with lower tariffs. “That would slightly increase Australian production of goods and services, the report found, further boosted by cheaper imports to Australia from the rest of the world as they redirect their supply away from the US,” the papers write.
The RBA and Treasury have continually warned the opposite — that Trump’s chaotic tariffs will have a negative impact on the Australian economy.
In terms of the latest on the 79-year-old’s super excellent, really well thought-through economic plan, CBS News reports the US president said on Monday that 25% tariffs on goods from Japan and South Korea will come into effect from August 1.
The Financial Times flags Trump claims the US goods trade deficit with both countries was a “major threat to our economy and indeed our national security”.
In letters addressed to Japan’s Prime Minister Shigeru Ishiba and South Korea’s President Lee Jae-myung, which Trump posted on Truth Social, the countries were warned that any increase in tariffs in retaliation “will be added on to the 25% that we charge”. But also “these tariffs may be modified, upward or downward, depending on our relationship with your country”.
Which, look, some will argue is just a continuation of the endless tariff threats, pausing, threats cycle we’ve had since the start of the year.
White House Press Secretary Karoline Leavitt attempted to convince everyone there really was a plan though, saying in the last few hours that in addition to Japan and South Korea, the leaders of 12 more countries will receive letters from Trump announcing new tariffs, The Guardian reports.
Leavitt said Trump plans to “create tailor-made trade plans for each and every country on this planet” and added he was once again extending his deadline to allow more time to negotiate deals (haven’t we heard that line a lot these past six months…).
CNN reports Trump has also posted letters to the leaders of Malaysia, Kazakhstan, South Africa, Myanmar and Laos informing them of new tariff rates as high as 40%.
ALBO GETS MORE ADVICE ON CHINA TRIP
As this all plays out, Prime Minister Anthony Albanese continues to receive advice he didn’t ask for on what to do when he travels to Beijing this weekend.
The West Australian reckons Albanese will “receive a red carpet reception” during his trip to China to meet President Xi Jinping. The paper says the trip will span five days and also involve “a delegation of high-profile business executives”, including senior figures from BHP, Rio Tinto, BlueScope Steel, HSBC and Herbert Smith Freehills Kramer.
Yesterday, we flagged how ambassador Xiao Qian wrote in the AFR championing deepening economic ties between Canberra and Beijing by expanding a free trade agreement to include things such as artificial intelligence. Today the same paper is reporting on security analysts and the opposition warning against the very idea.
Elsewhere, the paper’s national affairs columnist Jennifer Hewett argues “the notion of Australia and China becoming trusted AI and digital economy partners is ludicrous”. She also joins the crowd in making the comparison between the Beijing trip and the American question, saying “the prime minister is sending a confused message on Australia’s relationship with the US”.
Artificial intelligence is obviously being discussed in every walk of life now, and Capital Brief leads this morning on its interview with Australia’s Chief Justice Stephen Gageler, who has declared AI represents an “existential threat” to the justice system.
In the interview, Gageler says AI is forcing courts to reconsider the role of a judge.
“If you’re a plaintiff and you have an AI system formulating your arguments, and there’s a defendant who has an AI system formulating the defendant’s arguments, is a judge going to have another AI system judging between these two computer-generated arguments? Or do you have one AI system? I mean, really, it’s that big an issue,” Gageler is quoted as saying.
Meanwhile, Semafor has the latest on media companies increasingly using AI. The site reports Fortune sent an internal memo last week announcing a new section called Fortune Intelligence, which is “essentially stories co-written with chatbots, though the memo repeatedly stressed that ‘human oversight is required at every stage before publication’”.
Semafor reports Axios is also loosening its prohibition on AI-written stories.
Meanwhile, The New York Times has a feature on job-seekers across the US increasingly starting to encounter faceless voices and avatars backed by AI in their job interviews. As the paper puts it: “You might have thought artificial intelligence was coming for your job. First it’s coming for your job interviewer.”
ON A LIGHTER NOTE…
In what has been described as “the most Wimbledon warning you’ve ever heard”, an umpire has had to ask spectators at the tennis tournament to stop popping champagne bottles during matches.
The incident occurred during American Amanda Anisimova’s victory over Hungary’s Dalma Gálfi at Wimbledon last week, Reuters reports.
In response to the endless cork-popping during their game, Anisimova said afterwards, “I mean, it kept happening. At some point I was, like, can everybody just do it on the changeover?”
The BBC has footage of the incident and the commentators’ reaction to the unusual request from the umpire.
Anisimova has since gone on to defeat Linda Noskova and reach the Wimbledon quarter-finals.
Say What?
I have a concern regarding a patient who presented here earlier, but has left the building and is potentially exposed to a fatal toxin from mushroom poisoning.
Dr Chris Webster
Jurors were played a recording of a phone call from the doctor at Leongatha hospital in Victoria to police after Erin Patterson discharged herself, against medical advice, the BBC reports.
CRIKEY RECAP
Bessent’s announcement was a double TACO — the original pause on the “Liberation Day” tariffs was justified as enabling scores of countries to rush to Trump, bend the knee and negotiate new trade deals that would halt the “reciprocal” tariffs (in fact, it was in response to a threatened surge in US Treasury bond rates).
No trade deals — in the commonly agreed sense of the term — have been negotiated. Something called a US-UK trade deal was announced, but it has virtually no substance. Last week’s deal with Vietnam is more of an agreement to work toward a deal. As yet another deadline shift indicates, the rush to Washington was more in the Mad King’s demented mind than in reality.
That deadline shift — which could of course be abandoned in five minutes — relieves the Reserve Bank of a particularly unfortunate coincidence: its meeting this week would have occurred in similar circumstances to the now notorious RBA meeting at the start of April, literally hours before Trump set the world economy aflame with his “Liberation Day” tariffs.
‘It is completely incongruous’: How the media’s coverage of Gaza has sent reporters independent
Australian media has witnessed an exodus of talent from newsrooms in the past 18 months — not just those made redundant by shrinking media organisations, but also those leaving voluntarily, courtesy of how their newsrooms have been reporting on Gaza and the Middle East.
However, not all of those reporters have left the industry entirely. Some of the highest-profile names to have spoken out against how newsrooms have covered the conflict have found new homes in their own independent outlets.
Welcome to Trump’s media world, where moguls pay up at the cost of ethical journalism
Now it seems, the old media hosts have decided that all those journalists — with their highfalutin ethics — are simply unnecessary. Far better, like News Corp, to lean into those more reliable large language models — to “enhance” workflow, of course.
As a political story, the Trump clap-back at media owners reads a lot like the all-too-common pattern of autocrats acting to consolidate news media in the hands of oligarch allies — as has Orban in Hungary, or Erdoğan in Turkiye, with excessive fines on news media that step out of line.
Welcome to Trump’s mafia state, Putin biographer and New York Times writer Masha Gessen said in April: “an absolutely centralised system in which one person, the patron, the don, distributes money and power”. Now in mass media, too.
READ ALL ABOUT IT
Tony Blair’s staff took part in ‘Gaza Riviera’ project with BCG (The Financial Times)
Man shot through eye and buried alive survived attempted murder by ‘contract crew’, NSW police allege (Guardian Australia)
Tesla stock price slides after Elon Musk says he’s formed a new political party (CBS News)
Victorian government announces new police taskforce in wake of ‘sickening’ antisemitic attacks (ABC)
Jeffrey Epstein died by suicide and there’s no ‘client list,’ Justice Department says (CNN)
THE COMMENTARIAT
Death on edge of custody demands new mindset for NT police — The Herald’s View (The Sydney Morning Herald): She warned NT Police should not consider Rolfe the only “bad apple” as his racist language and attitudes were found among fellow police in Alice Springs. Further, she condemned the failure of police and health authorities to coordinate movements so that there was no adequate medical care available at Yuendumu to treat Walker as he lay dying.
She also made 32 recommendations, including investigating recruitment processes, carrying weapons in communities and strengthening NT Police anti-racism strategies and an investigation into internal NT Police complaints.
Whose interests would OpenAI’s blueprint serve? — Jessy Wu (AFR): Australia needs to chart its own course. We must carefully weigh AI-enabled productivity uplifts with the economic cost of displaced jobs. We must be strategic in what we subsidise, directing public money towards building sovereign AI capabilities, not enriching foreign AI labs.
If we’re serious about building data centres to power the APAC region’s AI training and inference, then we must urgently develop the energy generation mix that’s required.
Australia’s path forward shouldn’t be written by a Silicon Valley tech giant with a clear vested interest. It should be developed by Australians to serve Australian workers, Australian businesses, and Australian interests.
