Australia inflation slows in Q1, market leans against rate hike

Australian inflation eased from 33-year highs in the first quarter as the cost of living saw the smallest rise in more than a year, while core inflation dipped below forecasts suggesting less pressure for another hike in interest rates.

Investors reacted by lengthening the odds on the Reserve Bank of Australia (RBA) resuming raising rates at its May 2 meeting, having paused in April after a 10-hike streak.

Futures now imply only a 9% chance of a quarter-point rise in the 3.6% cash rate, while the local dollar shed early gains to stand at $0.6620 .

The market had already moved that way overnight after a regional U.S. bank reported a huge outflow of deposits, suggesting global financial strains were not yet over.

Data from the Australian Bureau of Statistics on Wednesday showed the consumer price index (CPI) rose 1.4% in the March quarter, just above market forecasts of 1.3% but the smallest increase since late 2021.

This report’s information was first seen on REUTERS; to read more, click this link.