RBA Rate Cut Expectations Diminish After Higher-Than-Expected Inflation Data

According to Odaily, recent inflation data has caused a shift in market expectations regarding potential rate cuts by the Reserve Bank of Australia (RBA). Although RBA Governor Michele Bullock has indicated that interest rate cuts are not imminent, the money market has been betting on a reduction in rates. However, July’s inflation rate in Australia came in slightly higher than anticipated, leading to a decrease in these rate-cut expectations.Following the release of the inflation data, the probability of a rate cut by the RBA in November has been reduced to 42%, down from 56% before the data. Despite this adjustment, the market still predicts an 88% chance of a rate cut by December, particularly as the U.S. Federal Reserve is expected to have implemented two rate cuts by then, according to current market pricing.