Although the elephant in the room at the upcoming meeting of the Reserve Bank of Australia board will be the highly uncertain global economic outlook, continued slow progress on reducing inflationary pressures should give it just sufficient confidence to cautiously further ease monetary policy.

Not helping assess what the trade war means for the global economic outlook, and indeed for Australia, is that the news flow on tariffs and other trade barriers keeps changing, with associated volatility in financial markets. As one senior US Federal Reserve board member commented, “Considering this uncertainty, it is impossible to forecast how the economy will evolve very far into future.”