Australia Inflation Rate Slows Down, Easing Pressure on Interest Rates

Australia's inflation rate slowed down in the June quarter, easing pressure on the Reserve Bank of Australia to hike interest rates. The country's consumer price index (CPI) rose 0.6% in the second quarter from the previous period, with annual CPI easing to 4.0% from 4.1%. Core inflation, measured by the trimmed mean, increased by 0.8% on-quarter and 3.6% annually.

The RBA had forecast a 0.9% gain in core inflation, while market forecasts were for 3.7%. UBS and Westpac have given up their calls for an interest rate hike next month, with UBS still expecting one rate hike in November. The local stock market rallied 1%, the Australian dollar fell 0.3% to $0.6953, and 3-year government bond yields declined 10 basis points to 4.482%. New dwelling prices jumped 5.8% in June from a year ago, while rent inflation held steady at an elevated rate of 3.6%.