Australian inflation fell slightly in July, with the Reserve Bank of Australia expected to keep interest rates unchanged
Australia's inflation data for July, released on Wednesday, showed that CPI rose by 3.5% year-on-year, slightly higher than expected but lower than the previous value. Core inflation stood at 3.8%. Due to easing inflation pressures, albeit not significantly, the Reserve Bank of Australia maintained the benchmark interest rate at a 12-year high of 4.35%. It is expected that there will be no rate cut and further policy tightening may be necessary to bring the inflation rate down to the 2%-3% range
According to the Zhitong Finance APP, the Australian inflation data for July released on Wednesday suggests that price pressures have begun to ease in the current quarter, but not at a pace sufficient for the Reserve Bank of Australia to cut interest rates early. Data released by the Australian Bureau of Statistics shows that Australia's CPI rose by 3.5% year-on-year in July, lower than the previous value of 3.8% and slightly higher than economists' expectations of 3.4%; the adjusted core inflation index rose by 3.8% year-on-year, lower than the previous value of 4.1%.
Earlier this month, the Reserve Bank of Australia kept its benchmark interest rate at a 12-year high of 4.35% and indicated that it remains vigilant about the upside risks to inflation. RBA Governor Brock stated that she does not expect a rate cut this year and warned that further policy tightening may still be needed. The RBA's target is to bring the inflation rate within the target range of 2%-3%.
Economist James McIntyre said, "The hawkish stance of the RBA highlights its efforts to control inflation. The RBA's position contrasts sharply with countries such as New Zealand, Canada, and the UK that have already started easing cycles, and the Fed is also preparing to cut rates next month." It is reported that the pace of rate hikes by the Reserve Bank of Australia is slower than in other countries because it aims to maintain employment growth, leading to its benchmark interest rate being about 1 percentage point lower than that of the United States.
The RBA has kept rates unchanged so far this year while emphasizing that total demand still exceeds the economy's supply capacity. Brock expressed willingness to be patient as she seeks to slow inflation without stifling economic growth. The RBA's forecasts indicate that core CPI will not return to the target range until the end of 2025. The market and economists expect the RBA to once again keep rates unchanged at next month's policy meeting