Macroeconomic uncertainties abroad and a cautious approach to the fight against inflation were in focus during the RBA’s April meeting.

The Reserve Bank of Australia (RBA) has decided the leave the official cash rate at 4.1 per cent during the April monetary policy meeting.

The move was expected by markets and economists for several reasons, particularly, the board’s hawkish stance following the rate cut during the February meeting, a lack of material economic data prior to the meeting (the March quarter CPI print, for example), and growing geopolitical uncertainty.

The hawkish rhetoric was on display once more in the following Statement By Monetary Policy Board: “The board’s assessment is that monetary policy remains restrictive.”

“The continued decline in underlying inflation is welcome, but there are nevertheless risks on both sides and the board is cautious about the outlook.”

The statement further read that the RBA will continue to rely on emerging data and the evolving assessment of risks to guide its decisions.

“The board is resolute in its determination to sustainably return inflation to target and will do what is necessary to achieve that outcome.”

The RBA also noted significant uncertainty concerning on the “outlook abroad”, particularly the looming Trump tariffs set to take effect tomorrow (2 April), which are “having an impact on confidence globally” and would “likely be amplified if the scope of tariffs widens, or other countries take retaliatory measures”.

The statement acknowledged easing inflation over recent months, however, expressed further caution from board members that progress will continue in the right direction for inflation to remain sustainably in the 2% – 3% range.

The board noted that monetary policy is well placed to respond to international developments if they were to have material implications for Australian activity and inflation.

Despite the decision to hold, two of the RBA’s pain points have seen some relief, referring easing inflationary pressures and some “early signs of loosening in labour force indicators”.

However, the RBA is still wary about low productivity domestically as well as the uncertain outlook amid global trade and geopolitical tensions.

Rates were kept on hold today, as most expected, the February rate cut has already influenced housing markets, sending home values 0.3% higher in February before rising 0.4% in March.

The outlook for interest rates “remains positive”, with more cash rate cuts likely to occur over the year, but only gradually.

The quarterly inflation outcome, which will be released on [30 April] ahead of the RBA’s next board meeting, will be a key factor influencing the RBA’s decision in May.

If core inflation holds below the 3% mark, which seems highly probable, it is looking more likely that we will see a second cut to the cash rate.

The hold in the cash rate reflects the “consistently cautious tone” from board members.

While we might expect we’ll see another cut to the cash rate this year, the RBA will want to see the impact of the February rate cut flow through to the economy before making another change.

The February rate cut encouraged borrowers around the country to review their home loans.

Financial pressure remains a reality for many households, and while measures to alleviate cost-of-living challenges were included in the Federal Budget, the impact will take time and depend on the upcoming election.