A “dovish” Reserve Bank has cut interest rates to their lowest level in two years and raised hopes of more mortgage relief on the way for borrowers.

Fears over what Donald Trump’s tariffs could do to the Australian economy dominated the RBA board’s decision to cut the official cash rate by a quarter of a percentage point to 3.85 per cent on Tuesday.

Australia’s major banks immediately passed on the cut to variable rate mortgage holders, saving the average borrower about $90 a month.

On the domestic front, low unemployment and high wages growth are keeping the RBA on its toes about the risks of inflation reigniting.

But with the main inflation measure back in the central bank’s target range of two to three per cent, it’s no longer the burning concern it once was.

“Price increases have slowed and it’s fairly broadly based, and this is very good news,” governor Michele Bullock said in her post-meeting press conference.

“We think this is the right decision at this point in time. Where this leads us in the future is a little more uncertain.”

Domestic considerations were overpowered by the global trade storm brewing overseas.

The board noted upside risks to inflation appeared to have diminished “as international developments are expected to weigh on the economy”, in a more dovish post-meeting statement than April, noted NAB economists Sally Auld and Taylor Nugent.

“With inflation expected to remain around target, the board therefore judged that an easing in monetary policy at this meeting was appropriate,” the statement said.

The words “uncertainty” or “uncertain” appeared 132 times in the bank’s Statement on Monetary Policy, released alongside the board statement.

In its quarterly update to its economic forecasts, the RBA lowered its prediction for underlying inflation from 2.7 per cent to 2.6 per cent by the middle of the year.

Australia’s economy is tipped to grow 0.3 percentage points slower in 2025 at 2.1 per cent, while unemployment is expected to peak 0.1 percentage higher at 4.3 per cent.

But Ms Bullock stressed this was only the bank’s baseline case.

In a more pessimistic scenario war-gamed by RBA staff, Australia’s economy would be three per cent – or $80 billion – smaller than it otherwise would have been by mid-2027.

“If you look at our scenario analysis, it does suggest that in a really bad outcome there could possibly be a recession,” Ms Bullock conceded.

With all four big banks announcing they would pass the cut on in full to variable rate mortgage holders, borrowers with a median mortgage of $600,000 will pay about $90 less per month in interest repayments.

Treasurer Jim Chalmers said it was welcome relief for millions of Australians.

“We are really pleased to see more help is on the way for working families with a mortgage, and that’s what this decision today is all about,” he told reporters.

“Global economic uncertainty is casting a dark shadow over the whole global economy, and we are not immune from that. We’re better placed, we’re better prepared, but we’re not immune from those developments.”

Money markets and most economists had tipped the cut ahead of the RBA’s announcement.

Expectations of additional cuts firmed following the announcement. 

The market was pricing in a better than even chance of another 25 basis point cut at the RBA board’s next meeting in July, up from 35 per cent, with up to three cuts expected by year’s end.

Federal and state politicians have started talks on the possible extension of a massive gas project which faces fierce opposition from conservationists.

Environment Minister Murray Watt arrived in Perth on Tuesday, ahead of a meeting with Western Australia’s Labor government, along with industry, conservation and Indigenous groups, about Woodside’s North West Shelf gas project.

The energy company’s proposal to extend the operating life of its gas project from 2030 to 2070 has been under assessment for six years, and a decision has been delayed twice.

Senator Watt has said he intends to approve or reject it by the May 31 deadline.

WA Premier Roger Cook’s government has approved Woodside’s plan, with the final tick of approval needed from the federal government.

“We’ll be urging him to make a decision in relation to the North West Shelf gas extensions as soon as possible, but in a manner which provides for a safe and legally sound decision,” the premier told reporters.

Philanthropist Janet Holmes a Court weighed in on the debate, zeroing in on the potential impact of the extension on Indigenous rock art near the Karratha Gas Plant in operation since 1984, labelling it vandalism.

“I really urge the minister to visit the site and to consider the consequences of permitting Woodside to extend … the pollution that will destroy this ancient, important and significant site,” she said.

Ms Holmes a Court, whose son is Climate 200 founder Simon Holmes a Court, expects court challenges if the extension is granted.

Australian Conservation Foundation campaigner Piper Rollins said the extension decision was a climate test for the Albanese government.

“Woodside is proposing to drill, extract and export gas until 2070, which is wildly inconsistent with Australia’s net-zero by 2050 commitment, and is deeply inconsistent with Labor’s own mediocre climate ambition,” she said. 

The foundation will meet with the Senator Watt during the week.

Greenpeace campaigner Geoff Bice called on the minister to reject the application.

“We know from Woodside’s plans that the main reason they want that extension to go on is to allow drilling for gas from underneath the Scott Reef,” he said.

“We’re confident that when the minister looks at the full evidence that he will be able to make that decision to knock back North West Shelf.”

Australian Marine Conservation Society chief executive Paul Gamblin warned approving the extension could “haunt us forever”.

Woodside’s project is on and offshore the Burrup peninsula in northwest WA, known as Murujuga, which is nominated for UNESCO World Heritage listing as it contains the world’s largest collection of Aboriginal rock art.

WA Greens MP Sophie McNeill called on the state government to release a report about the rock art.

“We know that they’ve been sitting on it since December last year, and it is critical that before the decision on the North West Shelf extension is made, they release it,” she said

Fear of reprisal drove soldiers serving alongside disgraced veteran Ben Roberts-Smith to look the other way as he committed war crimes, appeal judges have found.

The Federal Court on Tuesday published its reasons for dismissing Roberts-Smith’s appeal against the finding he was responsible for the murder of four unarmed civilians in Afghanistan.

The incidents, first reported by journalists Nick McKenzie and Chris Masters in Nine newspapers in 2018, sparked a years-long defamation fight.

Justice Anthony Besanko in 2023 found the claims were substantially true.

The court dismissed the Victoria Cross recipient’s appeal against that finding on Friday, adding to a legal bill expected to run into the tens of millions of dollars. 

Roberts-Smith argued the judge erred in finding he killed a man with a prosthetic leg and ordered the execution of another, elderly man at a compound called Whiskey 108 in order to “blood the rookie”.

The judge failed to give weight to official records suggesting the pair were insurgents legitimately killed while fleeing the compound, or adequately deal with the improbability of a widespread conspiracy to conceal the truth when those records were made, the appeal argued.

Rather than a widespread conspiracy, the court ruled there were other, simpler explanations.

“It can be explained by the more pedestrian, if disappointing, path of widespread individual failure.

“All the soldiers that knew or suspected looked the other way,” Justices Nye Perram, Anna Katzmann and Geoffrey Kennett said in the published findings.

Soldiers told the court they feared reprisal.

“I was afraid what would possibly happen to me if I was seen to be the bloke who was speaking out about incidents and not playing the team game,” one said.

“The primary judge’s conclusion that the soldiers had reasons not to speak out was, as His Honour correctly observed, part of the sad facts of the case,” the appeal judges said.

Roberts-Smith bringing the prosthetic leg back to Australia and encouraging other soldiers to drink beer out of it was also found to be substantially true by the primary judge and was among the findings for which appeals were dismissed.

The appeal court found no errors in Justice Besanko’s finding that Roberts-Smith had murdered a man named Ali Jan by kicking him off a cliff and ordering another soldier to shoot him. 

The September 11, 2012, incident in the Afghanistan village of Darwan was among other reported claims found to be substantially true that conveyed to readers that Roberts-Smith was a war criminal who had disgraced his country and its army.

Similarly, no errors were found in a finding Roberts-Smith ordered another soldier, through an interpreter, to shoot a detained man in nearby Chinartu about a month later.

An argument Justice Besanko failed to apply legal principles for determining truth was also rejected.

The court ruled he had carefully and repeatedly adhered to them, discussing them at length in his reasoning.

The trial judge was “acutely conscious of the seriousness of the findings”, resisting some when nonetheless compelling evidence was insufficient, the appeal court said.

He had also rejected evidence from Roberts-Smith and others as false.

Two errors in the primary judge’s reasoning were detected but ruled immaterial on the appeal.

The trial ran for 110 days, stretched out over more than a year.

More than a thousand documents were tendered and 44 witnesses were called.

The appeal itself took 10 days, with numerous pre-trial and post-trial hearings, taking the case’s total estimated bill north of $30 million.

Roberts-Smith plans to appeal to the High Court.

“I continue to maintain my innocence and deny these egregious, spiteful allegations,” he wrote in a statement on Friday.

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Women’s health research in Australia has been given a record financial boost, paving the way for better diagnosis and treatment of a debilitating and historically ignored condition.

UNSW Sydney will establish the Ainsworth Endometriosis Research Institute, thanks to a record-breaking $50 million philanthropic donation by the Ainsworth family. 

The world-first institute will help progress diagnosis and treatments, and improve the lives of people living with the disease.

Endometriosis is a condition where tissue similar to the lining of the uterus is found outside the uterus, causing severe pelvic pain, fatigue and in some cases infertility.

It is estimated to affect more than one million Australian women and girls and about 200 million people globally.

The institute will bring top scientists, clinicians, and philanthropists together from around the world to accelerate diagnosis breakthroughs and create precision-based treatments.

The funding is the largest known philanthropic donation by a family to endometriosis research globally and to women’s health in Australia.

The Ainsworth family earned their wealth through creating two of the world’s biggest poker machine manufacturing companies, Aristocrat Leisure and Ainsworth Game Technology. 

They are also keen philanthropists, with the latest donation one of many to medicine, science and cultural institutions. 

In Australia, the economic burden of endometriosis is estimated between $7.4 billion and $9.7 billion annually.

Lily Ainsworth and her mother Anna have both experienced the chronic pain and uncertainty that comes with the condition.

“Endometriosis and all its symptoms and repercussions are everywhere and yet we still don’t understand it,” Lily Ainsworth said.

“(The institute) is hope, it’s hope for those living with endo now, and it’s hope for all those little girls who are staring down the barrel of a life with endo.

“Living with endo in the future will be different to living with endo today.” 

Many people with endometriosis endure years of symptoms without answers, waiting an average six to eight years for an accurate diagnosis.

Eimear McHugh, a nurse and endometriosis advocate, suffered for years with debilitating symptoms that were often dismissed by doctors as “normal”.

She had her gall bladder removed in a bid to treat her symptoms but it wasn’t until a gynaecologist investigated the possibility of endometriosis that she was able to address the illness. 

“Aside from impacts on the physical effects of the symptoms, just getting an answer about what was causing them meant so much,” she told AAP.

“Anyone with endometriosis will agree that this validation is such an important part of managing the illness effectively.”

The institute aims to fast-track new understandings of the disease by focusing on genomic research, bio-repositories and advanced testing, led by scientific director Caroline Ford.

The gender health gap had been caused directly by a historical lack of funding and research into diseases and conditions affecting women, Professor Ford said.

“We cannot improve the lives of people with endo unless we invest in research,” she said. 

“This (institute) is going to result in new avenues for early diagnosis, novel treatments and informed decisions regarding care.

“With this amazing investment we’re going to be able to unravel the complexity of this disease.” 

Governor-General Sam Mostyn attended the announcement of the institute at the UNSW on Tuesday. 

“It is indisputable that breakthroughs in diagnosis and treatment of endometriosis will have a broad and inclusive impact and will affect us all,” she said. 

“The AERI is a significant step forward in breaking the generational silence and making the vital discoveries that will drive unprecedented progress in endometriosis.” 

Australia’s economy will take an $8 billion dollar hit in 2025 as a result of Donald Trump’s tariffs, the Reserve Bank estimates in updated economic forecasts.

Inflation is also expected to come in lower than it otherwise would have, the RBA’s Statement on Monetary Policy revealed.

The central bank’s quarterly assessment of the state of the economy, released on Tuesday alongside a 25 basis point cut to the cash rate, is the first since the US president’s imposition of wide-ranging tariffs on April 2. 

Uncertainty remained pervasive despite a recent reduction in trade tensions between the US and China, RBA staff noted in the document.

“Financial conditions could tighten sharply again if expectations for significantly lower tariffs than originally announced following negotiations do not materialise, and the outlook for trade policies remains very uncertain,” the statement read.

Previously, the bank’s forecasts had Australia’s economy peaking at 2.4 per cent annual growth by the end of 2025, but the growth forecast for this year has been shaved by 0.3 percentage points. 

GDP growth is now expected to reach a high of 2.2 per cent midway through 2026.

China’s GDP is predicted to grow at a slower rate than previously anticipated, but much depends on how much stimulus Chinese authorities decide to tip into the economy to reach their five per cent growth target.

The IMF slashed Australia’s GDP growth forecast for 2025 to 1.6 per cent in April.

In the RBA’s baseline forecast, trimmed mean inflation is expected to hit 2.6 per cent by the middle of the year, down from 2.7 per cent previously.

Unemployment is expected to lift to 4.3 per cent by the end of 2025, higher than the 4.2 per cent previously forecast.

But the bank is keeping an open mind as to how trade tensions play out, also taking into account optimistic and pessimistic alternatives.

In its ‘trade war’ scenario – in which all countries, including Australia, retaliate with higher tariffs – Australian GDP growth would be three per cent lower than the baseline and unemployment would skyrocket to nearly six per cent.

Underlying inflation would slow to about two per cent by the end of 2026, assuming rates fall in line with market expectations.

Meanwhile, a ‘trade peace’ scenario, in which successful trade negotiations reduce US tariffs back to 2024 levels, would result in higher domestic economic growth and the unemployment rate sticking around the current 4.1 per cent level.

Inflation would be at the higher end of the RBA’s 2-3 per cent target range in this scenario.

Despite the 90-day truce in trade hostilities, US tariffs on China remain at the highest level since the 1930s and uncertainty will remain elevated, given the temporary nature of the pause.

Businesses the bank interviewed as part of its liaison program indicated elevated uncertainty about the economic outlook, although the share of firms intending to keep their headcount stable in the year ahead has remained the same.

The bank said it was too early to tell whether the decline in the US dollar indicated a lasting view that US assets had lost safe-haven status or could be explained by more conventional factors, such as investors rebalancing their portfolios.

Recent flooding and Cyclone Alfred also lowered GDP growth by around 0.1-0.2 percentage points in the March quarter, the RBA estimates.

Nuclear energy has blown up a political agreement between the Nationals and the Liberals after leaders failed to reach common ground, but left the door open for a reconciliation.

The traditional political marriage couldn’t be consecrated following a disastrous result for the coalition at the federal election with the Nationals standing firm on wanting to retain four key policies. 

These included remaining committed to nuclear energy, divestiture powers to break up big supermarkets, a $20 billion investment fund that would disperse $1 billion a year on regional infrastructure and universal phone services.

Landlines and payphones must have service no matter where they are in Australia but this doesn’t extend to mobile phones, which the Nationals have been fighting to include.

Nationals Leader David Littleproud said the party didn’t want to have to re-prosecute the case to retain the policies it fought for under the previous agreement in opposition.

“It’s on a principled position of making sure that those hard-fought wins are maintained and respected and we continue to look forward,” Mr Littleproud told reporters in Canberra on Tuesday.

The change in opposition doesn’t have a substantial impact on the government’s ability to pass legislation with Labor commanding a major majority in the lower house and only needing the Greens in the Senate. 

The Liberals still have the numbers to pass legislation in the Senate with Labor without the Nationals.

Without a coalition agreement, Labor has a significant electoral advantage with the Liberals holding fewer than 30 of 150 lower house seats and the Nationals 15.

The Nationals won’t sit in shadow cabinet, meaning they won’t hold sway over policies and the half-dozen MPs who were around the table will take a paycut.

The coalition last broke up in 1987 for about four months.

Mr Littleproud left the door open for a future arrangement, saying the two parties would still work together to fight the Labor government.

Opposition Leader Sussan Ley faces the task of rebuilding the Liberals after a wipeout at the May 3 election.

The break up would give Ms Ley the time and space she needed to rebuild her party, Mr Littleproud said.

“They are going on a journey of rediscovery and this will provide them the opportunity to do that without the spectre of the National Party imposing their will,” he said.

Mr Littleproud denied the Nationals were a drag on the Liberal vote in the inner cities.

Their policies were popular, especially in their regional seats, and others such as the push to scrap public sector working from home entitlements – spearheaded by Liberal senator Jane Hume – were electoral poison, he said.

Households are hoping for a cut in their mortgages when the Reserve Bank hands down its latest interest rates decision, as the finance minister says lowering inflation is “welcome progress”.

Economists are tipping the Reserve Bank to cut the official cash rate by 25 basis points to 3.85 per cent, when its two-day meeting wraps up on Tuesday.

Should the central bank cut rates, it would be only the second time in almost five years that interest levels on mortgages have been reduced.

Finance Minister Katy Gallagher noted homeowners would be watching the bank’s decision closely, adding that a fall in inflation levels was a positive sign.

“We know inflation has come back into band … and that is a welcome progress that has been made over the last two years,” she told ABC TV on Tuesday. 

“We know that has been hard for households.”

Sonali Saluja recently settled her first property purchase: a three-bedroom, two-bathroom house in Geelong costing $586,000.

The 38-year-old senior school administrator, who moved to Australia from India in 2008 to study business at university, is delighted to have secured her “dream house” before rate cuts potentially drive prices even higher.

“If I were not into the property market, that would have been scary because there would be the bull rush now that’s possibly going to happen after the rate cuts,” she told AAP.

“And then you just have to settle on the property that you’d get, basically, and not what you want. So I’m really lucky to have found something that I wanted.”

Inflation for the March quarter remained steady at 2.4 per cent, while underlying inflation, which removes volatile price movements, dropped to 2.9 per cent.

Both measures are within the Reserve Bank’s target band of two to three per cent.

Nicola Powell, chief economist at property portal Domain, said an interest rate cut was pretty much a given.

As well as moderating inflation and sluggish consumer spending, US President Donald Trump’s tariffs have bolstered the case for a cut to support the Australian economy, amid an anticipated global slowdown.

“Obviously, it’s going to be at the forefront of their mind, the impact that that is going to have on the domestic economy,” Dr Powell told AAP.

Despite the progress on inflation, prices remained high, Senator Gallagher said.

“Some of those really high peaks in inflation really hit household budgets, and people felt it when they went to the supermarket, when they paid their bills,” she said.

“We get the job isn’t done either and that we’ve got to continue our focus, not only on inflation but also on productivity on that side of the economy over the next couple of years.”

Money markets and most economists agree the central bank will cut rates by 25 basis points.

That would result in the median mortgage holder with a $600,000 debt having to pay about $90 less per month in interest repayments, assuming the banks pass it on in full.

Dr Powell said she would be surprised if they didn’t, given that competition among the banks for customers and new loans was high.

If the RBA did slash rates by 100 basis points – or 75 as the market is predicting – by year’s end, house prices are likely to surge.

Increased borrowing capacity for home buyers will cause demand to rise, and with the provision of new supply still hampered by high construction costs and planning bottlenecks, prices will follow, Dr Powell said.

Given the widespread expectations of a rate cut, market attention will turn to the Reserve Bank’s statement and governor Michele Bullock for signs of where the board is likely to go next.

How much Ms Bullock pushes back on market pricing of the cash rate, as she did following the February decision, will feed into investor confidence of further cuts.

Young workers earn 70 per cent of an adult wage but a union is demanding the federal government change this given the cost of living pressures.

Under the “adult age, adult wage” campaign, the Shop, Distributive and Allied Employees Association (SDA) is lobbying for workers aged 18 to 21 in retail, fast food and pharmacy jobs to be paid more.

The minimum wage for an adult is currently $24.10 an hour, while an 18-year-old earns 70 per cent of that at $16.46 an hour.

A 19-year-old can earn $19.88 an hour and a 20-year-old can earn $23.54.

But this is just minimum wage for younger workers, with some companies opting to pay employees more or even the adult rate.

The federal government made its formal submission to the Fair Work Commission during its annual review of minimum and award wages earlier this month.

The government said the country’s lowest-paid workers should receive an “economically sustainable real wage increase” but did not nominate a specific figure.

The SDA has written to the government calling on it to include changes to the youth minimum wage in its application to the Fair Work Commission.

“18-year-olds can vote, drive and put their lives on the line for their country,” said Gerard Dwyer, National SDA Secretary.

“Eighteen-year-olds are adults. They struggle with the same cost-of-living pressures as every other adult. 

“They should be paid the same as other adults.”

Retail, fast food and pharmacy companies employ more than 1.5 million people with a high number of those being under 21.

“Eighteen-year-olds should not be treated as second-class citizens,” Mr Dwyer said. 

Their work is as valuable as anyone else’s and they should be paid accordingly.”

The Fair Work Commission is due to hand down its annual wage review decision in June.

Donald Trump’s new ambassador to the UK has used his first public speech to back the AUKUS partnership with Britain and Australia.

Warren Stephens highlighted how “vital the US-UK relationship is to our countries and to the world” at an event in parliament attended by UK Prime Minister Keir Starmer on Monday.

Stephens said the AUKUS partnership, which is developing a new fleet of nuclear-powered hunter-killer submarines for the UK and Australia, would help maintain a “free and open Indo-Pacific”.

The ambassador’s decision to make his first public address in support of the project is symbolically important, given it is a legacy of Joe Biden’s term in the White House.

The alliance, which also covers collaboration on other advanced technologies, is seen as an attempt to counter the influence of China in the region.

Stephens said AUKUS was based on “peace, security and prosperity”.

“Those three ideas lie at the heart of our partnership promoting peace by developing our technologies and deterring our adversaries, bolstering security by training and trading together to fend off threats from cyber attacks to submarines and boosting prosperity by maintaining a free and open Indo-Pacific, while creating jobs and investment from Brisbane to Barrow and to Newport News.”

He said AUKUS was a “partnership built on trust, and the United States is proud to stand alongside Britain and Australia, two of our closest allies, as we deepen our collaboration to respond to a changing world”.

Stephens also highlighted the economic opportunities from the project.

“Government works best when we get out of the way and let our businesses innovate, compete and collaborate to improve people’s lives.

“President Trump and I know this to be true, as it has been repeatedly proven throughout history. That fact is built into the AUKUS partnership, which sees great American, British and Australian companies innovating and investing to maintain our critical technological edge.”

Starmer told the event in the House of Lords, organised by the all-party parliamentary group on AUKUS, that “when we talk about security and stability, we mean it – in the Indo-Pacific and here at home”.

Australia’s high commissioner Stephen Smith told the event: “What underpins economic growth is, of course, security and the AUKUS trilateral partnership is, at its very heart, ensuring we continue to have peace and security, not just in the Indo-Pacific, but in the Euro-Atlantic as well.”