Australia's central bank is predicted to keep interest rates steady on Tuesday amid ongoing election-related discussions surrounding the cost of living and preparation for potential economic consequences resulting from shifts in global trade influenced by the US. Economists anticipate that the Reserve Bank will maintain the current rate of 4.1% and uphold a cautious approach, following a recent decrease for the first time in four years. Governor Michele Bullock is scheduled to conduct a press conference an hour following the decision at 3.30 p.m. Sydney time.

This comes at the beginning of an election campaign that could lead to a closely contested outcome during the May 3 vote. It is anticipated that a minority government will materialize, necessitating either the ruling Labor party or the opposition to form alliances with smaller parties or independent entities to secure a parliamentary majority.

Following the bank's decision, President Donald Trump's plans to impose substantial tariffs on US trade partners will occur, potentially affecting global economies, including Australia. Despite avoiding direct impacts, Australia's economy, reliant on global activities and sentiment, may still experience repercussions.

Recent reports indicate a loss of over 50,000 jobs in February and inflation rates falling within the RBA's target range of 2-3%. The board is expected to assess additional data before considering further cuts. Chief economist Luci Ellis from Westpac Banking Corp. highlighted that consecutive cuts were not previously under consideration, emphasizing that the RBA's credibility might be at risk if another cut occurs in April following the recent decrease.

While there is a 2-in-3 chance of a rate cut in May according to money markets, a reduction is not fully anticipated until July. The meeting scheduled for May 19-20 is deemed more plausible as the election will be concluded, providing clear insights into the economic impact of the tariffs and updated inflation data, allowing the RBA to make informed decisions based on comprehensive forecasts.