The RBA left rates unchanged on Tuesday, while maintaining a broadly neutral stance. However, the Bank’s meeting was quickly overshadowed by the US election and the prospect of a second Trump administration. In our view, looming geopolitical risks are unlikely to have a major bearing on rate-setting by the RBA. Our analysis suggests that a new tariff war would have a negligible impact on domestic inflation in Australia. Concurrently, any drag on economic activity from weaker external demand will probably be modest.
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