Tax Insights Survey | May 2025

In the May 2025 Tax Insights survey, we asked Australian businesses How do you think the RBA’s latest rate cut to 3.85% will affect business confidence in Australia?

With the Reserve Bank of Australia reducing the cash rate to 3.85% in its most recent decision, we asked survey participants to share their thoughts on what this means for business confidence nationwide.

Cautious optimism — but uncertainty dominates

The majority of respondents appear to be taking a wait-and-see approach, with 41.6% stating that it’s too early to tell what impact the rate cut will have.

Here’s how responses broke down:

41.6%: I’m unsure – it’s too early to tell
36.2%: It’s too little to make a difference
12.5%: It will boost confidence and investment
9.7%: It signals concern and may shake confidence

What do these results suggest?

While the RBA's decision to lower rates may have been intended to stimulate activity, the response from survey participants suggests it has not yet inspired widespread confidence. With more than three-quarters of respondents either uncertain or unconvinced about the effectiveness of the cut, businesses may still be hesitant to make bold investment decisions.

Interestingly, only 12.5% of respondents view the rate cut as a catalyst for renewed investment and growth, while a smaller 9.7% interpret the decision as a signal of concern from the central bank — potentially dampening sentiment further.

What does this mean for business planning?

In a climate of mixed signals and cautious sentiment, strategic planning becomes even more critical. Whether the rate cut eventually bolsters activity or not, businesses must be prepared to navigate ongoing uncertainty.

At RSM, our advisers can help you assess the implications of monetary policy shifts and develop robust strategies to manage risk and pursue opportunities — regardless of which way confidence trends.