Today’s Australian inflation data is important as it could affect the Reserve Bank of Australia’s (RBA) decisions. The RBA’s meeting is scheduled for August 11-12, and many expect a 25 basis point rate cut after the last meeting when rates stayed the same.

Key Details on Inflation Data

Everyone is focused on the core inflation rate, known as the ‘trimmed mean,’ which comes from the Australian Bureau of Statistics. You’ll find this measure labeled as ‘RBA Trimmed Mean’ in the economic data calendar. The economic data calendar shows times in GMT, with last month’s or quarter’s results on the right. Next to these figures is the consensus median expectation, which serves as a benchmark for comparison. Today’s inflation data is crucial for shaping the RBA’s future strategy, particularly regarding changes in monetary policy. We have the latest quarterly inflation figures, which are essential for the Reserve Bank. The core trimmed mean reading, released earlier today, showed a 0.7% increase for the quarter. This is slightly below the market expectation of 0.8%. This result supports our belief that the RBA is likely to act at its upcoming meeting on August 11-12.

Market Reactions and Predictions

In response to the inflation data, interest rate derivatives are making a significant move. The ASX 30-day interbank cash rate futures for August now indicate an 85% chance of a 25 basis point cut. This is up from the 70% chance before this morning’s inflation data was released. For currency traders, this weaker inflation report is putting pressure on the Australian dollar. We expect the AUD/USD pair to test lower levels leading up to the RBA decision. Using put options could be a smart strategy now that this crucial data has aligned with market trends. This situation reminds us of the 2016-2019 period when the RBA made several rate cuts because inflation consistently stayed below its 2-3% target range. This historical pattern gives us confidence that the central bank will consider further easing. We believe the current situation will follow a similar path. The weak inflation data does not come alone; it follows recent disappointing retail sales figures, which showed a 0.3% contraction in June. Given this backdrop, we should prepare for the RBA to announce the expected 25 basis point cut. The focus will then shift to the bank’s guidance for the future to assess its willingness to ease further this year. Create your live VT Markets account and start trading now.

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