The latest inflation data, which were recorded before the USA’s recent series of tariff announcements, show further progress in the battle against inflation, making future interest rate cuts more likely.
The annual headline inflation rate fell from 2.5% in January to 2.4% in February, according to the Australian Bureau of Statistics, which was the seventh consecutive month it had been within the Reserve Bank of Australia’s (RBA) target range of 2-3%.
Also, the annual trimmed mean inflation rate (which the RBA regards as more reliable, because it excludes items with wild price swings from inflation calculations) fell from 2.8% in January to 2.7% in February, which was the third consecutive month it had been within the target range.
The RBA has kept interest rates quite high over the past three years, in order to reduce demand from the economy and put downward pressure on inflation.
If the RBA believes inflation is now under control, it may consider reducing the cash rate at its next monetary policy meeting in May, which would prompt lenders to reduce their mortgage rates. That said, the RBA may place even greater weight on the global instability caused by the tariff issue when deciding whether to change the cash rate.
