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The Star
10 hours ago
- Business
- The Star
Australia's core inflation hits 3-1/2-year low, firming July rate cut case
SYDNEY: Australian consumer price inflation slowed more than expected in May, while the closely watched core measure eased to three-and-a-half-year lows in a boost to the case for a rate cut just next month. The slowdown in the core gauge prodded investors to ramp up bets for a rate cut from the Reserve Bank of Australia in July to 90%, from 81% before. For all of 2025, another three rate cuts have been fully priced in. Three-year bond futures rose 2 ticks to 96.74, while the Australian dollar held earlier gains of 0.2% at $0.6504. Data from the Australian Bureau of Statistics on Wednesday showed the monthly consumer price index (CPI) rose 2.1% in May compared with a year earlier. That was down from 2.4% in April and under median forecasts of 2.3%. In the month, CPI fell 0.4% from April as petrol prices eased and housing costs cooled. The trimmed mean measure of core inflation increased by an annual 2.4% in May, coming under the mid-point of the 2-3% target band. That was down from 2.8% in April and also the lowest reading since late 2021. A measure excluding volatile items and holiday travel dipped to 2.7%, from 2.8%. "We are convinced that the RBA needs to cut in July to safeguard growth as inflation is clearly out of their way now," said Krishna Bhimavarapu, APAC economist at State Street Global Advisors. "We are tracking faint consumption and growth in Q2, and hence, the bank may do well to frontload the cut to July." The RBA has cut interest rates twice since February to 3.85% as cooling inflation at home offered scope to counter rising global trade risks. However, economic growth has remained subdued as consumers stayed frugal, with U.S. tariffs and geopolitical conflicts darkening the economic outlook. The labour market has proved to be resilient. The unemployment rate remains low at 4.1% and job advertisements are stabilising above pre-COVID levels. Wages have been well-behaved, with growth in the private sector mostly subdued. Wednesday's report showed services inflation slowed to an annual rate of 3.3%, from 4.1% the previous month, while rents rose 4.5%, the lowest annual growth since December 2022. New dwelling prices were flat in the month, while holiday travel and accommodation prices fell 7% after a 6% rise in April, which was driven by holiday demand. - Reuters
Yahoo
14 hours ago
- Business
- Yahoo
Australia's core inflation hits 3-1/2-year low, firming July rate cut wagers
By Stella Qiu SYDNEY (Reuters) -Australian consumer price inflation slowed more than expected in May, while the closely watched core measure hit three-and-a-half-year lows as investors locked in bets for an imminent rate cut. Swaps now imply a 90% probability that the Reserve Bank of Australia would cut rates by a quarter-point when it delivers its policy decision on July 8, a day before the expiry of a 90-pause in U.S. reciprocal tariffs on other countries. That was up from 81% before the data. "We are convinced that the RBA needs to cut in July to safeguard growth as inflation is clearly out of their way now," said Krishna Bhimavarapu, APAC economist at State Street Global Advisors. "We are tracking faint consumption and growth in Q2, and hence, the bank may do well to frontload the cut to July." Data from the Australian Bureau of Statistics on Wednesday showed the monthly consumer price index (CPI) rose 2.1% in May compared with a year earlier. That was down from 2.4% in April and under median forecasts of 2.3%. In the month, CPI fell 0.4% from April as petrol prices eased and housing costs cooled. Crucially, the trimmed mean measure of core inflation increased at a slower annual pace of 2.4% in May, coming under the mid-point of the 2-3% target band. That was down from 2.8% in April and also the lowest reading since late 2021. The RBA has cut interest rates twice since February to 3.85% as cooling inflation at home offered scope to counter rising global trade risks. However, the economy barely grew in the first quarter as consumers stayed stubbornly frugal on heightened worries about the economic impact of U.S. tariffs and geopolitical conflicts. All of that argued for more policy easing from the RBA in the months ahead, with investors expecting a total easing of 78 basis points by the end of the year. Analysts at TD Securities on Wednesday changed their next rate cut call to July, from August, after the "big downside miss" in the CPI report. "The RBA's likely comfort on most inflation metrics brings forward our prior Aug and Nov cuts to July and Aug," they said in a note to clients. "We lower the terminal rate from 3.35% to 3.10%." The labour market has so far stayed resilient. The unemployment rate remains low at 4.1% and job advertisements are stabilising above pre-COVID levels. Wages have been well-behaved, with growth in the private sector mostly subdued. Wednesday's report showed services inflation slowed to an annual rate of 3.3%, from 4.1% the previous month, while rents rose 4.5%, the lowest annual growth since December 2022. New dwelling prices were flat in the month, while holiday travel and accommodation prices fell 7% after a 6% rise in April, which was driven by holiday demand. 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
The Guardian
15 hours ago
- Business
- The Guardian
Falling inflation rate boosts chances of RBA interest rate cut and relief for mortgage holders
Australia's inflation rate has eased again, bolstering expectations the Reserve Bank will lower the cash rate next month and bring further reprieve for mortgage holders. The headline inflation rate was 2.1% in the 12 months to May, down sharply on the previous month's figure of 2.4%, according to consumer price index figures released on Wednesday. KPMG chief economist Brendan Rynne said there was a 'continued pattern of deflation across the Australian economy'. 'This could provide comfort to the Reserve Bank at its next meeting, knowing that any cut to the cash rate will occur in a stable inflationary environment,' Rynne said. Sign up for Guardian Australia's breaking news email Krishna Bhimavarapu, economist at State Street Global Advisors, said: 'We are convinced that the RBA needs to cut in July to safeguard growth as inflation is clearly out of their way now.' While the monthly result can be volatile and is viewed as less authoritative than quarterly figures, the steep fall has pushed inflation towards the bottom of the RBA's 2-3% target range. The RBA's preferred CPI measure, the 'trimmed mean' or underlying inflation rate that strips out volatile items and various government subsidies, decreased to 2.4% from 2.8%. Markets upped their bets on a rate cut after the data was released, with markets now indicating near consensus support for a quarter point cut on 8 July. In total, traders expect three more rate cuts this year. While further rate cuts will be welcomed by mortgage holders, any further reduction in borrowing rates is expected to fuel another surge in property prices, making homes more unaffordable for prospective buyers. Economists at the major banks still believe the RBA will wait until August to cut. ANZ economist Madeline Dunk said the July meeting would be a 'close call'. 'It's going to be a pretty tough decision and it really depends on how concerned the RBA is about what's been happening globally,' Dunk said. She said the disruption caused by the initial US tariff announcements had faded, giving economic activity a chance to stabilise.
Reuters
15 hours ago
- Business
- Reuters
Australia's core inflation hits 3-1/2-year low, firming July rate cut case
SYDNEY, June 25 (Reuters) - Australian consumer price inflation slowed more than expected in May, while the closely watched core measure eased to three-and-a-half-year lows in a boost to the case for a rate cut just next month. The slowdown in the core gauge prodded investors to ramp up bets for a rate cut from the Reserve Bank of Australia in July to 90%, from 81% before. For all of 2025, another three rate cuts have been fully priced in. Three-year bond futures rose 2 ticks to 96.74, while the Australian dollar held earlier gains of 0.2% at $0.6504. Data from the Australian Bureau of Statistics on Wednesday showed the monthly consumer price index (CPI) rose 2.1% in May compared with a year earlier. That was down from 2.4% in April and under median forecasts of 2.3%. In the month, CPI fell 0.4% from April as petrol prices eased and housing costs cooled. The trimmed mean measure of core inflation increased by an annual 2.4% in May, coming under the mid-point of the 2-3% target band. That was down from 2.8% in April and also the lowest reading since late 2021. A measure excluding volatile items and holiday travel dipped to 2.7%, from 2.8%. "We are convinced that the RBA needs to cut in July to safeguard growth as inflation is clearly out of their way now," said Krishna Bhimavarapu, APAC economist at State Street Global Advisors. "We are tracking faint consumption and growth in Q2, and hence, the bank may do well to frontload the cut to July." The RBA has cut interest rates twice since February to 3.85% as cooling inflation at home offered scope to counter rising global trade risks. However, economic growth has remained subdued as consumers stayed frugal, with U.S. tariffs and geopolitical conflicts darkening the economic outlook. The labour market has proved to be resilient. The unemployment rate remains low at 4.1% and job advertisements are stabilising above pre-COVID levels. Wages have been well-behaved, with growth in the private sector mostly subdued. Wednesday's report showed services inflation slowed to an annual rate of 3.3%, from 4.1% the previous month, while rents rose 4.5%, the lowest annual growth since December 2022. New dwelling prices were flat in the month, while holiday travel and accommodation prices fell 7% after a 6% rise in April, which was driven by holiday demand.
Zawya
17-02-2025
- Business
- Zawya
Yen rallies on growth data, dollar steady around two-month low
The yen rose on Monday in a boost from upbeat Japanese growth data, while the dollar hovered near its lowest in two months after investors dialled down their bets on U.S. tariffs. The dollar last traded down 0.4% against the yen at 151.63, having fallen as low as 151.48 following data showing Japan's economy grew more than expected in the fourth quarter on improved business spending and a surprise rise in consumption. That cemented the case for more rate hikes from the Bank of Japan this year. Markets are now pricing in roughly another 37 basis points worth of increases by December. "The key takeaway for us is that the nominal household consumption grew significantly faster than real consumption and their divergence remained wide, which may activate the BOJ's inflation fighting mode," said Krishna Bhimavarapu, APAC economist at State Street Global Advisors. "At the very least, this data removes the fears of stalling consumption, and is positive for the BOJ to deliver another hike, which could now come sooner rather than later." In the broader market, the dollar was struggling to recoup its losses after a selloff on the back of Friday's weak U.S. retail sales data and as investors cheered a delay in the implementation of President Donald Trump's reciprocal tariffs. U.S. stock and bond markets were closed, with traders off for Presidents' Day, although the dollar was still trading on international markets. The dollar index last stood at 106.8, flat on the day, after tumbling 1.2% last week. Geopolitics remained in focus with reports that talks aimed at ending the Russian-Ukraine conflict will begin in Saudi Arabia this week. The euro was last down 0.13% at $1.0478, having traded at its highest in two weeks on Friday at around $1.051. Sterling was up 0.1% at $1.2595, after hitting a two-month high of around $1.263 on Friday. "The dollar weakness... was a function of both ongoing optimism that maybe tariffs are not going to be as disruptive as originally thought - that of course, remains to be seen, the Ukraine story is still bubbling in the background there," said Rodrigo Catril, senior FX strategist at National Australia Bank. "And then the data, of course, playing to the idea that maybe the U.S. exceptionalism is running out of steam, so it's weighing on the U.S. dollar." The Australian dollar rose to a two-month high against a weaker dollar and last bought $0.6363, ahead of a rate decision from the Reserve Bank of Australia (RBA) on Tuesday. The RBA is expected to deliver a quarter-point cut, marking its first reduction in over four years as it joins other major central banks in their easing cycles. The kiwi similarly scaled a two-month top before paring some gains to trade at $0.5733, ahead of the Reserve Bank of New Zealand's policy decision on Wednesday, where markets have priced in a 50-basis point reduction. (Reporting by Rae Wee in Singapore and Harry Robertson in London; Editing by Sonali Paul, Bernadette Baum and Angus MacSwan)
