The $A and bond yields tumbled after inflation data came in softer than expected, but economists are still divided on the RBA’s interest rate path.
The Australian dollar and bond yields tumbled as traders slashed the odds of the Reserve Bank raising interest rates next week after inflation softened more than expected in the June quarter.
More importantly, the RBA’s preferred measure of core inflation – the trimmed mean – slowed to 5.9 per cent from 6.6 per cent, which was slightly softer than the market’s and the RBA’s expectation of 6 per cent. “We think we are very close to the peak in the interest rate cycle, noting that the RBA may err on the side of doing one more to truly get prices rolling lower.”. While goods inflation fell to 5.8 per cent in June, services inflation accelerated to a two-decade high of 6.3 per cent.
AMP believes next week’s RBA meeting is now a “very close call”, and that it could be influenced by retail sales data released on Friday. The firm still lowered its peak cash rate forecast to 4.35 per cent from 4.6 per cent.“We remain of the view that the RBA has already done more than enough to return inflation to target in a reasonable period,” Dr Oliver said.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Major change to how RBA announces rate decisionsIncoming Reserve Bank Governor Michele Bullock will front the media an hour after future interest rate decisions are announced, the bank has confirmed, as part of a new strategy to better inform the public about how the RBA operates.
Read more »
Inflation falls to 6pc, taking pressure off the RBAThe price of clothes, furniture and appliances, and other consumer goods have fallen and helped bring the inflation rate to lower than market economists expected in the June quarter, but the cost of some services remains high.
Read more »
Inflation eases more than anticipated as RBA considers another rate pauseInflation in Australia continues its downward trend giving the Reserve Bank thought to pause interest rates for a second month in a row.
Read more »
Chief economist predicts additional rate hike before RBA leadership changeMacroBusiness Chief Economist Leith van Onselen says he expects another interest rate hike to avoid a situation where the new RBA governor may need to raise rates. 'I think technically it makes sense...there's this good cop, bad cop regime, and Philip Lowe is leaving anyway,' he told Sky News host Sharri Markson. 'So I think they might do one more just to give her an easy run.'
Read more »
Australia not ‘through the woods’: RBA trying to predict economic futureThe RBA is trying to predict what will happen to Australia’s economy over the next three years, deciding whether or not they will need to raise the cash rate again. Former Liberal advisor David Gazard told Sky News Australia, “It is good to see inflation coming down, I think people will be breathing a bit easier”. “But it would be a mistake to have a loose fiscal policy running now in the expectation that we’re through the woods.”
Read more »
RBA doing the ‘heavy lifting’ compared to govt on reducing inflationSky News Business Editor Ross Greenwood says the “heavy lifting” to tackle inflation is done by the Reserve Bank rather than the Australian government.
Read more »