RBA urged to keep rates on hold

Good morning, it's Amy here in Melbourne with your Friday newsletter. Today's must-reads:• Ex-RBA board member urges rate pause• Our latest

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Good morning, it's Amy here in Melbourne with your Friday newsletter.  Today's must-reads: • Ex-RBA board member urges rate pause • Our latest podcast on banks • Rio Tinto's aluminum plans

What's happening now

Former Reserve Bank of Australia board member Warwick McKibbin thinks the central bank should keep interest rates unchanged next week.  He spoke with my colleague Swati Pandey, citing fiscal stimulus and global uncertainty. Most economists and traders expect the RBA to cut its key rate to a two-year low of 3.85% on Tuesday. Australia's finance industry is beset by a raft of compliance lapses, from data reporting breaches to trader misbehavior. In our latest podcast, Chris Bourke asks Bloomberg finance editor Adam Haigh: What's going wrong with some of our biggest banks, and how did they fare in the latest reporting season? Rio Tinto Group plans to spend as much as $1.2 billion by 2032 to modernize its 99-year-old power plant in Quebec. The decision comes despite tariffs implemented by the Trump administration on Canadian imports of aluminum. More than a third of Australian homes are now valued at A$1 million or more, up from around 10% a decade ago. The portion of dwellings in the million-dollar club jumped to 34.4% last month according to consultancy Cotality.

What happened overnight

Here's what my colleague, market strategist Mike "Willo" Wilson says happened while we were sleeping… Treasuries and US stocks rose after soft producer prices and retail sales data. This saw a gauge of the dollar retreat, as traders held firm on bets for two Federal Reserve interest-rate cuts by year-end to avoid a recession. Oil slumped after Donald Trump said the US is close to a nuclear deal with Iran. Today sees New Zealand's two-year outlook for inflation in focus, as the RBNZ's May 28 interest decision looms. The flurry of AI deals stemming from Trump's Middle East tour is opening rifts within his administration. China hawks worry about security as Saudi Arabia and the UAE gain access to advanced US chips, people familiar said. Trump secured $200 billion in deals during a visit to the United Arab Emirates.  President Donald Trump and Saudi Crown Prince Mohammed bin Salman on May 14 Photographer: Win McNamee/Getty Images Europe Singapore Airlines warned tariff and trade tensions on top of broader economic and geopolitical uncertainties could hurt demand for passenger and cargo flights. The carrier's cautious outlook emerged despite full-year profit beating estimates and revenue rising to a record.  Superhero films have been the staple of Hollywood blockbusters for 15 years, but audience interest is flagging, writes Bloomberg Opinion's Gearoid Reidy. He says the success of Minecraft suggests video games can be the next big-screen big thing. Jack Black attends the world premiere of "A Minecraft Movie" in March  Photographer: Jeff Spicer/Getty Images Europe

What to watch

• New Zealand inflation expectations, 1pm Sydney time

One more thing...

Microsoft's AI ambitions have their own hurdles. CEO Satya Nadella explains how nervous customers and a rocky partnership with OpenAI are complicating things for the world's most valuable company. "OpenAI has been so far ahead that no one's really come close," Nadella tells Bloomberg Businessweek. "DeepSeek, and R1 in particular, was the first model I've seen post some points." Have a great weekend.  Microsoft CEO Satya Nadella  Photographer: Stephen Brashear/Getty Images North America

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