Australian inflation data due soon – RBA rate cut speculation for February meeting

Australian CPI data is due today, for December month 2024 and, more importantly, for Q4 2024. Overall, while headline inflation appears to be within the RBA’s target range, underlying measures remain slightly elevated.

Some analyst comments:

• Westpac anticipates a quarterly CPI increase of 0.3%, bringing the annual rate to 2.5%. Their trimmed mean estimate is a 0.6% rise for the quarter, with the annual pace easing to 3.3% from the previous 3.5%. Westpac notes that energy rebates and cost-of-living assistance have contributed to headline inflation reaching the midpoint of the Reserve Bank of Australia’s (RBA) target band.

• Commonwealth Bank of Australia (CBA) projects that the trimmed mean CPI rose by 0.5% in Q4, reducing the annual rate to 3.2%. On a six-month annualized basis, core inflation is forecasted to have eased to 2.5%, aligning with the RBA’s 2-3% target range. CBA suggests that a lower-than-expected underlying inflation figure could prompt the RBA to consider an interest rate cut in February. More here on this:

  • Critical Australian inflation data due – likely to tick the RBA rate cut box?

• Deloitte Access Economics predicts that the upcoming inflation figures will show a decrease to 3.3% for the year ending December. Despite underlying inflation aligning with the RBA’s target, factors such as a strong job market, high government spending, and a weakening dollar may cause the RBA to hesitate in cutting interest rates in February. Deloitte partner Stephen Smith forecasts the cash rate could drop from 4.35% to 2.85% by the end of 2025

Data due at 0030 GMT, 1930 US Eastern time.

This article was written by Eamonn Sheridan at www.forexlive.com.