Zhitong Finance and Economics learned that Australia's consumer ** index (CPI) remained at a two-year low in January, breaking the expectation of a small ** and strengthening the market's expectation that interest rates do not need to be raised further. Data released by the Australian Bureau of Statistics on Wednesday showed that the CPI in January was **3 year-on-year4%, unchanged from December last year and lower than the market expectation of 36%。
A closely watched measure of core inflation, the revised average inflation rate rose 3.0% year-on-year8%, down from 40%。Inflation, which excludes fluctuating items and holiday travel, rose from 4 in December2% to 41%。The January CPI alone was down 0 from the previous month due to declines in holiday travel, clothing and gasoline**3%。Holiday travel inflation fell 5 percent from the previous month2%。
Since May 2022, the RBA has raised interest rates by 425 basis points to 435% 12-year high, and does not rule out the risk of another rate hike if necessary to bring inflation back to the bank's target range of 2-3%. Earlier this month, the Rate-Setting Committee considered further rate hikes as it found that aggregate demand remained above the economy's potential, raising the risk that inflation would not return to target within a reasonable time. The RBA's official** show that inflation will not fall back into the target range until December 2025.
Bloomberg economist James McIntyre expects continued upward pressure on home rents, insurance and household utility bills to keep inflation "elevated". McIntyre said in a note that the data will feature prominently in discussions at the RBA's March meeting, along with Q4 GDP data scheduled for next week. "We expect the central bank to remain on hold and maintain its tightening bias to ensure inflation expectations are under control," McIntyre added. ”
After the release of the data, the market reaction was limited, as the January data was largely skewed towards commodities, which were faster than services, suggesting some downside. Financial markets believe that the RBA has ended its tightening. Swaps imply a roughly 60% chance of a first rate cut in August, with a total of 38 basis points of rate cuts by the end of the year, little changed from the previous one. The Australian dollar was largely flat against the US dollar at 06547, Australia's three-year government bond** held steady at 9626。