Australian bank chiefs warn tariffs could hinder rate cuts
The leaders of two major Australian banks have expressed concern about the potential effects of Donald Trump’s trade policies on the global economy. They warn that escalating trade tensions could hurt economic growth and increase inflation. National Australia Bank (NAB) CEO Andrew Irvine shared his worries at a banking summit in Sydney. He noted that while current tariffs from the US are not a big issue for Australia, a larger trade war could lead to rising inflation. Irvine described this scenario as "tariff madness," which could impact interest rates in the future. Commonwealth Bank CEO Matt Comyn also addressed the issue. He predicted that high uncertainty related to tariffs and trade barriers could lead to more volatility in financial markets. Comyn believes that global economic growth may decline, contributing to inflation. Irvine indicated that if tariffs rise significantly, it would limit the Reserve Bank's ability to cut interest rates as much as planned. He mentioned that NAB expects two more rate cuts later in 2025, but a "global tariff war" could change that. Despite these concerns, Comyn said Australia is in a better position than other countries to handle these challenges. He acknowledged that the local economy could still face slower growth and rising inflation. During the summit, the banking leaders welcomed the Reserve Bank's recent rate cut, which they said improved economic confidence. They noticed increased interest from mortgage borrowers, suggesting the cut had a positive effect on the market. Australian Prudential Regulation Authority (APRA) chair John Lonsdale highlighted the uncertainties banks face, including potential regulatory changes and international conflicts. He reiterated that APRA supports strong regulations to stabilize the banking sector following the 2008 financial crisis.