July 2025: RBA rate decision reveals

The Reserve Bank of Australia holds a cash rate of 3.85%, which is likely affected by President Trump’s decision to pause 90 days on “Liberation Day” until August 1.

With inflation at 2.1% and average at 2.4%, RBA seems comfortable as price pressures are controlled and the extended tariff pauses provide additional breathing space for monetary policy decisions.

Trump’s tariffs were suspended by August 1, and Australia’s storage room had more time to assess global trade momentum before major policy adjustments.

While Australia’s economic fundamentals remained in good shape, with unemployment steady at 4.1% in the March quarter and GDP grew by 0.2%, the Royal Zip Code seemed content to monitor how the extended pauses affected global trade patterns before providing additional stimulus.

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Reserve Bank of Australia Governor Michele Bullock. Experts say the decision by the RCMP to wait shows that they want to see how global trade tensions work.

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Trump tariff expansion provides breathing space

The extension of Trump’s tariffs to August 1 reduced immediate pressure on global trade flows, giving central banks, including Royal Bank more time to assess the economic situation. Although Australia is not the main trading partner of the United States, the potential impact of our largest trading partner China remains a consideration for future policy decisions.

The decision to wait for the RCMPs suggests they are using the extended pause to collect more economic data before providing other stimulus.

With further cuts this year, holdings today may prove to be a strategic pause, allowing for a more measured policy response as global trade uncertainty develops.

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Despite the pause, the momentum of the housing market continues

The decision to hold interest rates is that as Australia’s housing market shows extraordinary momentum, every major market is accelerating now.

Perth’s extraordinary monthly growth of 1.3% indicates that the market has once again built a huge momentum, while Melbourne and Sydney have a monthly growth of 0.5%.

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Nationwide, prices rose to $941,000 to $695,000.

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As house prices have risen to the median of $941,000 nationwide to $695,000, the current annual growth trajectory of homes and a 5.2% trajectory of units seems sustainable.

Before the end of the year, the market is still cutting the price of the three-tax rate, meaning today’s pause may be just a temporary probation, not a change in direction.