So do these Trump tariffs mean more rate cuts? Fewer cuts? Rate hikes!?
America's tariffs could make life more expensive, but they've wreaked so much havoc the RBA will probably cut interest rates in May.
US president Donald Trump's expansive global trade tariffs set markets plunging late last week. Yesterday the ASX alone lost $100 billion, the biggest drop since the Covid-19 pandemic.
But a trade war comes with some sort of silver lining, at least for borrowers. Most experts are predicting a rate cut next month and more to follow.
The forecast: cheaper home loans with a chance of recession.
Wouldn't all these tariffs lift prices and inflation up, making a rate cut less likely? Well, no.
For one, "Australia is one of the least exposed to tariffs directly, given less than 5% of our goods exports head to the USA," says Bendigo Bank chief economist David Robertson, who expects a rate cut from the RBA in May.
Inflation may not be the main problem for Australia's economy. Global economic slowdown is a bigger concern.
It also depends, Robertson said, "on the degree to which countries retaliate to US tariffs, or perhaps seek more reliable trade partners elsewhere."
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Australia could benefit from major shifts in global trade as countries turn away from the US.
"Rising trade barriers to manufactured exports from Asia to the US could lead to more cheap goods exported to Australia," says HSBC's chief economist for Australia and New Zealand Paul Bloxham.
"This is likely to put downward pressure on imported goods inflation in Australia."
Right now, the impact of these tariffs on global growth is the main concern. A rate cut from the Reserve Bank could stimulate growth and help balance out the uncertainty.
A second rate cut this year would be a welcome reprieve for borrowers. A 25 basis point cut can save the average Australian with a mortgage around $100 a month
Almost every lender passed on the RBA's February rate cut in full. But that might not be the case again.
"Some might look at this and come to the conclusion that falling interest rates is something to cheer about. But a slowing economy isn't good for anyone," says Finder's personal finance expert Sarah Megginson.
"While it might put pressure on the RBA to cut rates, the banks might not pass them on in full. When the economy slows, banks make less money more broadly because there are fewer transactions in the economy, fewer credit applications as people get conservative with spending."
And everyone's super balances, at least right now, are going backwards fast.
It's not much of a silver lining really.
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