AUD Slips as RBA Holds Interest Rates Steady Amid Softer Inflation

Australia's Q2 trimmed mean CPI came in below the Reserve Bank of Australia (RBA) forecast, validating Governor Michele Bullock's remarks that underlying inflation had evolved broadly as expected since May.

The data showed headline CPI slowed from 4.0% to 3.8% year-over-year in June, while trimmed mean inflation was unchanged at 3.6%. The RBA's own expectations were also met: both the monthly and quarterly trimmed mean measures came in below the central bank's May forecast of 3.8%, effectively validating Bullock's framing.

All four major Australian banks are now aligned, expecting the RBA to leave policy unchanged through year-end based on current information. This reinforces the perception that Australia's monetary tightening phase has probably ended unless a fresh inflation shock materializes.