Australia's Core Inflation Soars, Rate Hike Expectations Surge
Australia's Consumer Price Index (CPI) rose 1.0% month-on-month in July, exceeding market consensus of 0.8%. The year-on-year growth rate slowed to 3.5%, but still came in above the 3.3% forecast.
The core inflation gauge, closely watched by the Reserve Bank of Australia (RBA), rose 0.5% month-on-month and held at an elevated 3.6% year-on-year, remaining above the RBA's 2-3% target range.
The RBA has already implemented three rate hikes this year, but the latest data suggests those efforts are still only halfway there. Following the release, expectations for additional rate hikes strengthened rapidly across financial markets, with the probability of another rate increase by December implied by interest rate futures jumping from around 67% to 78%.