Australian mortgage-holders have 'dodged a bullet', with the Reserve Bank now less likely to hike rates next month after new data showed inflation unexpectedly eased to 3.8% in the year to June, from 4% in May.
The hotly anticipated consumer price report for June, released by the Australian Bureau of Statistics on Wednesday, showed the monthly CPI indicator fell to 3.8%, below market expectations of 4.0%. The decline was driven by lower prices for housing, food, and transport.
Economists said the data reduces the chance of a rate rise at the RBA's August meeting, though they cautioned that underlying inflation remains above the bank's 2-3% target. 'This is a welcome surprise for borrowers,' said Sarah Hunter, chief economist at KPMG Australia. 'But the RBA will want to see sustained progress before cutting rates.'
The RBA has held the cash rate at 4.35% since November 2023. Markets now price a 20% probability of a hike in August, down from 40% before the data. The Australian dollar fell slightly on the news.
