06:30 AM EDT, 04/01/2025 (MT Newswires) -- One of the main events early Tuesday was the Reserve Bank of Australia's latest policy meeting, said MUFG.

The RBA decided to leave its policy rate unchanged at 4.10% as expected after delivering the first rate cut in the easing cycle at the previous meeting in February, wrote the bank in a note to clients.

In the accompanying policy statement, the RBA acknowledged that underlying inflation continues to ease in line with its recent forecasts, but it reiterated that policymakers "need to be confident that this progress will continue so that inflation returns to the midpoint of the target band on a sustainable basis." The RBA described uncertainty about the outlook abroad as remaining "significant."

The RBA believes that United States President Donald Trump's tariff announcements are having an impact on confidence globally and this would likely be "amplified" if the scope of tariffs widens, or other countries take retaliatory measures.

The high level of uncertainty is expected to have an adverse impact on global activity by delaying spending decisions for households and firms. The RBA noted that it pays close attention to these developments when setting monetary policy, and will rely on the data and evolving risk assessment to guide its decisions.

The RBA's caution over committing to the timing of further rate cuts was also evident in the press conference, stated MUFG. Governor Michele Bullock noted that the RBA discussed downside risks to growth both at home and abroad, but that the impact on inflation was less certain.

The governor signalled that the RBA hasn't made up its mind yet on whether to cut rates again at the next meeting in May. Adding that she is a little more circumspect on rates than markets and doesn't have 100% on inflation yet.

In contrast, the Australian rate market is more fully pricing in another RBA rate cut in May, added the bank. The relatively hawkish comments from the RBA have provided some support for the Australian dollar, although it remains vulnerable to the risk of a more disruptive tariff announcement from President Trump on Wednesday, according to MUFG.