Key Points

• Markets have rebounded on the hope of further rollback of Liberation Day tariffs. We remain more concerned about the damage to business and household sentiment and consequently, have downgraded our global growth outlook in recent weeks.
• Locally, forecast revisions have been relatively modest. In part, this is due to an expectation of monetary easing, starting later this month. We expect the RBA to cut by 50bps in May, followed by 25bps in July, August, November and February.
• The Federal Election outcome saw the ALP returned with a larger than expected majority. The government is likely to take the election result as a strong mandate and we would expect that the government’s share of economic activity in Australia to increase over the next 3 years.
• We see a multi-year bear market in place for the USD and have lifted our year-end target for AUD/USD to 0.70. Our colleagues in the CIO Office at NAB Private Wealth & JBWere remain defensively positioned in multi-asset portfolios. In fixed income markets, ACGB out-performance should sustain as the trading range for the AUS-US 10Y spread shifts lower.

For further details please see Economic and Financial Market Update (5 May 2025)