Australia's RBA keeping track of US policy changes to assess impact

20 Mar '25

1 min read

Australia's RBA keeping track of US policy changes to assess impact

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The Reserve Bank of Australia is keeping track of US policy changes to assess the implications for interest rates as such developments can hit Australia via financial market channels like exchange rate movements, global bond yields and asset prices, and the ease of access to offshore funding, alongside any direct economic effects.
It cut interest rates in February for the first time since 2020.

The Reserve Bank of Australia (RBA) recently said it is keeping track of US policy changes to assess the implications for interest rates as such developments can affect Australia via financial market channels, such as movements in exchange rates, global bond yields and asset prices, as well as the ease of access to offshore funding, alongside any direct economic effects.

"One of the things we are focused on right now is US policy settings, the impact of these on the global economy and how this flows through to activity and inflation here in Australia; we have been using scenarios, analysis and judgement to assess the policy implications," Sarah Hunter, the central bank's chief economist was quoted as saying by Australian media reports.

RBA cut interest rates in February for the first time since 2020, but added it would move cautiously toward further cuts due to lingering inflation worries.

But since then, the US stock market has fallen sharply as investors grow anxious over unpredictable US policy making. Geopolitical risks have also risen.

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