The latest monthly CPI data for November 2024 was released today, and while the headline rate rose, the important trimmed mean figure, which the RBA tracks, slipped in November despite being still able the top of the central bank’s target band.
The closely watched trimmed mean core measure, which smooths out volatile items and is the focus of the Reserve Bank’s attention, slowed to 3.2% from 3.5% in the prior month, according to data from the Australian Bureau of Statistics today.
Economists do expect the RBA’s next move would be to ease rates though they are divided on the timing given the somewhat sticky core inflation and an uncertain global backdrop. A complete suite of price data for the December quarter will be released later this month which will be an important input for the RBA’s Feb. 17-18 meeting.
So, perhaps the chances of the Albanese government getting a pre-election boost from a February rate cut have risen and Treasurer Jim Chalmers said inflation had been at the lower end of the RBA’s 2 to 3 per cent inflation target band for three months in a row, and unusually referred three times to bond market forecasts for a pre-election cash rate cut during a press conference, in a potential sign of the government’s growing expectations for mortgage relief.
And of course the weak Aussie and predicted larger Government deficits are barriers to rate cuts, as I discussed recently. So whilst there there might be a symbolic cut before May, those expecting significant cuts this year should bear in mind the latest FED vibe which is perhaps for only one cut in 2025 for US rates.
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