"The RBA's decision to lower the cash rate to 3.6% proceeds with due caution in the face of global uncertainty and persistently poor productivity," said Innes Willox, Chief Executive of the Australian Industry Group.
"Australia's battle with inflation remains on track, with headline and underlying inflation continuing to moderate as forecast. However, the path of future easing remains unclear due to global disruptions and local labour market challenges.
"While the worst outcomes from US tariffs appear to have been avoided for now, the RBA rightly notes they will still have an adverse effect on the global and Australian economies. Until there is more clarity on landing points, we need to be alert to the ongoing risks faced by Australia's trade-exposed industries.
"At home, our poor productivity continues to make the job of economic recovery harder. The RBA points to a lack of pickup in productivity and high growth in labour costs this year as a constraint. In the absence of meaningful productivity growth, wage increases will continue to push up inflation and require tighter monetary policy than otherwise.
"This tension points to the need for immediate productivity-unlocking reforms. Australia cannot control global economic risks. But stronger productivity would allow more room to move in adjusting when they arrive at our shores.
"The Treasurer's Economic Reform Roundtable next week should heed this urgency, and seek to mix short-term wins with long-term visions for higher productivity in Australia," Mr Willox said.
