RBA Likely to Cut Rates After Receiving Key 'Outstanding' Inflation Data

Share this @internewscast.com

The Reserve Bank of Australia (RBA) is now highly likely to reduce interest rates next month following a decline in both annual headline and core inflation for the June quarter.

The Australian Bureau of Statistics published the consumer price index (CPI) data for the June quarter on Wednesday. The annual trimmed mean inflation, the measure preferred by the RBA, registered at 2.7 percent for the year ending 30 June, a decrease from 2.9 percent in the previous March quarter.

This marks the first occasion since December 2021 that trimmed mean inflation—an indicator of core inflation that excludes extreme price changes—has been this low and the second consecutive quarter within the RBA’s target range of 2-3 percent.

During the June quarter, headline inflation increased by 0.7 percent, with an annual rise of 2.1 percent, down from 0.9 percent and 2.4 percent respectively in the previous March quarter. This is the lowest annual inflation rate since the first quarter of 2021.

Treasurer Jim Chalmers has celebrated the figures.

“Today’s inflation numbers are outstanding,” he told Sky News. “There’s no two ways about it.”

Inflation data key to Reserve Bank’s next interest rate decision

The RBA kept rates on hold at 3.85 per cent earlier this month, defying expectations of a third cut this year following 0.25 per cent decreases in both February and May.

RBA governor Michele Bullock noted that this inflation data is crucial for the board’s upcoming meeting on 12 August, which will assess whether inflation is still on course to sustainably achieve the 2.5 percent target.

“Provided we are still on top of inflation, which is what we intend to be, then, and we’re getting confirmation that we are, then, yes, there is an easing cycle coming,” she said.

“We just want to confirm with a full quarterly CPI that we’re still on track to deliver inflation continuing down to the middle of the band over time.

“This is why we have decided to wait. We chose to pause and will reassess in August with this new data and updated forecasts. This will enable us to determine if we remain on the path to further easing.”

A line graph showing the interest rate has been kept at 3.85 per cent in July 2025.

The Reserve Bank kept interest rates at 3.85 per cent earlier this month. Source: SBS News

The ‘big four’ banks — Commonwealth Bank, Westpac, NAB and ANZ — all agree the next rate cut will come in August, at 0.25 per cent.

Sally Tindall, financial comparison site Canstar’s data insights director, said Wednesday’s figures were “the confirmation the RBA has been waiting for”.

“Inflation is back into the target band for the second quarter in a row and continuing to track towards the mid-point of 2.5 per cent, giving the RBA a clear runway to continue easing rates,” she said.

— Additional reporting by the Australian Associated Press