Australia's Interest Rate Dilemma Amid Global Trade Tensions

Australia's cycle of interest rate cuts may end if U.S. tariff policies lead to a global trade war, warns NAB CEO Andrew Irvine. The potential 'global tariff war' could increase global inflation, posing significant challenges for Australia, as the country recently reduced rates to 4.1%.

Australia may soon face the end of its interest rate reductions if the escalating 'tariff madness' from U.S. President Donald Trump spirals into a global trade war, warned National Australia Bank CEO Andrew Irvine on Tuesday.

Speaking at the Australian Financial Review Banking Summit, Irvine highlighted that a 'global tariff war' would trigger worldwide inflationary pressures, posing considerable challenges for Australia's economy, which cut interest rates to 4.1% last month for the first time since 2020.

NAB, a leading mortgage and business lender in Australia, currently anticipates two more quarter-point interest rate reductions in late 2025, though such forecasts might change if global economic tensions intensify.

(With inputs from agencies.)