But concerns remain that tariffs could drive inflation and limit rate cuts
Despite recent market volatility triggered by tariff announcements from US president Donald Trump, Australia is in a strong position to navigate global trade uncertainties, according to Commonwealth Bank of Australia (CBA) chief executive Matt Comyn.
Speaking at the Australian Financial Review Banking Summit in Sydney, Comyn highlighted Australia’s trade diversification and regional security as key factors in mitigating geopolitical risks.
“Australia is relatively well placed, but I think we certainly need to be very mindful about that over that medium and longer term,” Comyn was quoted as saying in a Bloomberg report. While slowing global growth and trade inefficiencies could drive inflation, he noted that Australia remains structurally resilient.
Australian bank stocks, including Commonwealth Bank, have been under pressure in recent weeks, with investors wary that trade tensions could weigh on economic growth. A major concern is that tariffs may contribute to rising inflation, limiting the Reserve Bank of Australia’s (RBA) ability to further cut interest rates.
The chief of Australia’s biggest bank said the country is well placed to weather the risks of a trade war, even after Donald Trump’s whipsaw tariff announcements recently spurred a steep selloff in global equity markets https://t.co/i2WTW6laNd
— Bloomberg (@business) March 18, 2025
National Australia Bank (NAB) chief executive Andrew Irvine echoed this sentiment, cautioning that inflationary pressures could influence monetary policy.
“If global inflation ticks up, what that means is that interest rates will not reduce to the level they otherwise would,” Irvine said at the summit. “If this tariff madness does happen, we could be at the end of the reduction cycle and so we’ll have to wait and see.”
Australia’s position in the global economy is distinct from countries aggressively cutting rates and those still grappling with inflation, leaving policymakers in a balancing act.
Westpac Group chief economist Luci Ellis has previously noted that Australia is not directly targeted by US tariffs. Instead, the impact will stem from broader global economic shifts, particularly China’s response. Ellis expects Chinese authorities to implement domestic stimulus measures to offset trade pressures, potentially softening the blow to Australia. While a weaker Australian dollar may increase the cost of US imports, Ellis does not anticipate this significantly delaying the RBA’s approach to monetary policy.
The RBA implemented its first rate cut in four years last month, but remains cautious about future easing, monitoring global economic conditions and inflationary risks.
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