RBA Hold Stance Gains Credibility Amid Softer Australian Inflation

Australia's inflation data for the second quarter came in softer than expected, with both the June monthly CPI indicator and the quarterly report undershooting market and Reserve Bank of Australia forecasts.

The annual consumer price index (CPI) slowed to 3.9% year-on-year, well below the RBA's forecast of 4.8%, while quarterly inflation eased sharply to 0.6% quarter-on-quarter from 1.4% in Q1.

The deceleration was driven primarily by softer housing and transport costs, suggesting a broader easing in price pressures across the basket.

Underlying inflation was also slightly softer than expected, with the RBA's preferred trimmed mean CPI rising to 3.6% year-on-year from 3.5% in Q1, but remaining below the Bank's forecast of 3.8%.