Reserve bank of Australia has confirmed to start cutting interest rates this week but the economy won’t feel anything to the end of this year. The research and prediction of RBA has target to cut its interest to 4.10% next week after the board meeting on Monday and Tuesday.

Australian NIEIR institute has stated that for next eight months’ inflation pressure won’t end. The reason for such inflation pressure that Australia feel is coming from USA, because of the tariffs impact. However, these pressures will be ended in 2026 from a world recession from interest rate rises caused by a meltdown in United States bond markets, thus forcing a 2nd global financial crisis.

The cause of the 2nd global financial crisis will be the inability of the United States to control its Federal public sector deficit, which is currently at 7 % of Gross Domestic Product (GDP).

Regarding the rate cut and the out coming events in global financial crisis that countries around the world feel the rate cut won’t help to ease the impact of crisis.

The RBA’s efforts are not just aimed at reducing interest rates, but at the established fact that the indicators have more than reliably shown that the reduction of interest rates is realistic. Even if it is predicted that the reduction of interest rates will not show the effect that is necessary on the economic level, most experts look at this reduction positively. The economic development strategy is closely related to the positive decisions of the central banks.

The goal is a slow recovery of the economy. And if there is no positive outcome for now, the decisions of the RBA can be decisive because it shows positive outcome or a good strategy for starting the economy.

With this move, the RBA will monitor the confidence of consumers and potential investors who expect the recovery of the Australian household. We already had the same strategy, or rather an example, with Canada and New Zealand, which less than a year ago started to reduce interest rates, and they are slowly showing progress in the search for a mortgage. Certainly this is not enough for the recovery of the economy, but it is a good indicator to start from the dead point in which the economy is.

Despite the fact that a large number of investors will turn their eyes to the USA and wait for the outcome until the end of the year, the banks will have to do something unexpected in order to start economic progress earlier. Regardless of the RBA’s decisions to cut interest rates, it will take time for people to take them seriously. This is not enough because a large number of investors will wait for the final outcome of the RBA and economic indicators at the global level.

In the coming period, the RBA will have to do a lot in terms of strategy for the improvement and development of the economy. Uncertainty about global tariffs may affect the RBA’s delay in lowering interest rates because America has introduced 25% steel and aluminum tariffs.