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>>Australia's CPI inflation shows persistent pressures, reinforcing a hawkish outlook for RBA rates.

Australia's CPI inflation shows persistent pressures, reinforcing a hawkish outlook for RBA rates.

crypthub

about 7 hours ago

Persistently High Core Inflation

The latest CPI shows core inflation staying above the RBA’s 2‑3% target, driven by services such as insurance, education, domestic travel and record‑high rents. Trimmed‑mean and weighted‑median measures remain sticky, even as headline inflation eases. Goods prices have softened thanks to better global supply chains, but services inflation tied to wages and capacity constraints persists. This composition suggests a slower path to inflation normalization.

RBA’s Reinforced Hawkish Outlook

The Reserve Bank of Australia continues a tightening bias, stressing data‑dependency and readiness to raise rates if needed. Governor Michele Bullock’s recent remarks underline a commitment to anchoring expectations and avoiding a wage‑price spiral. International peers like the Fed and ECB are also cautious, limiting any divergence in policy. Markets now price the first rate cut to occur no earlier than late 2025 or early 2026.

Economic Impact and Outlook

Structural pressures—housing shortages, high migration, energy transition costs, and resilient consumer spending—keep inflationary forces alive. Higher rates widen bank margins but increase mortgage burdens for households and raise borrowing costs for businesses. The RBA appears prepared to accept slower growth to restore price stability. Australians should anticipate an extended period of elevated interest rates.