Weaker-than-expected monthly inflation indicators in Australia reflect global trends and bolster the case for the Reserve Bank of Australia (RBA) to extend its rate pause at next week’s policy meeting.
Data released by the Australian Bureau of Statistics on Wednesday showed that the Consumer Price Index (CPI) rose 4.9% year-on-year in July, below the anticipated 5.2%.
The RBA’s projections suggest that by the end of 2025, inflation will retreat to the target range of 2-3%, as inflation has moderated for three consecutive months.
The easing of price pressures would be welcomed by RBA Governor Lowe, as the central bank has remained data-dependent following 12 rate hikes.
Market expectations of subdued CPI figures are anticipated to allow the RBA to maintain its current stance next Tuesday, leading to a further decline in the Australian dollar, a drop in yields of policy-sensitive three-year government bonds, and an upswing in the stock market.
