- The Australian monthly Consumer Price Index is projected to register at 2.3% for March.
- Quarterly CPI inflation is anticipated to moderate further, remaining below 3%, with core inflation metrics aligning with the RBA’s target range.
- The Reserve Bank of Australia is scheduled to convene in mid-May to deliberate on future monetary policy adjustments.
- The Australian Dollar is experiencing a slight depreciation against the US Dollar after recently attaining a new high for 2025.
Australia is poised to release a series of key inflation indicators on Wednesday, with financial markets widely forecasting a continued deceleration in price pressures as 2025 progresses. This anticipated easing of inflation is expected to bolster the case for further interest rate reductions by the Reserve Bank of Australia (RBA). The RBA’s upcoming monetary policy meeting is slated for May 19-20, where policymakers will assess the latest economic data and deliberate on potential adjustments to the current monetary stance.
The Australian Bureau of Statistics (ABS) is set to disseminate two distinct inflation measures: the quarterly Consumer Price Index (CPI) for the first quarter of 2025, providing a comprehensive overview of price movements across a broad range of goods and services, and the March monthly CPI, which quantifies annual price pressures over the preceding twelve-month period. The quarterly CPI report is particularly significant as it incorporates the RBA Trimmed Mean CPI, a closely monitored inflation gauge favored by policymakers for its ability to filter out short-term volatility and provide a more accurate reflection of underlying inflationary trends. Economists will be carefully scrutinizing both figures to gauge the overall health of the Australian economy and the effectiveness of current monetary policy.
The RBA opted to maintain the Official Cash Rate (OCR) at its current level of 4.10% during its meeting in early April. This decision followed a 25 basis points (bps) rate cut implemented in February, marking the first reduction in the OCR after a series of rate hikes initiated in 2022 to combat rising inflation. The central bank’s recent pause suggests a cautious approach, as it assesses the impact of previous policy adjustments and monitors global economic developments. Market participants are keenly awaiting the RBA’s forward guidance, seeking clues about the potential timing and magnitude of future rate adjustments, which will be heavily influenced by the trajectory of inflation and the overall strength of the Australian economy. Furthermore, the RBA will likely consider the monetary policy decisions of other major central banks, such as the US Federal Reserve, in formulating its own policy response.
