RBA Holds Rates Amid Softer Inflation

The Reserve Bank of Australia has decided to keep the cash rate unchanged as softer-than-expected core inflation eases pressure for further monetary tightening. Economists and business leaders say this decision extends a period of stability, but warn that structural pressures on prices and employers remain.

According to CreditorWatch Chief Economist Ivan Colhoun, trimmed mean inflation rose 0.8% quarter on quarter in the June quarter, slightly below market expectations of 0.9%. He notes that this is the second straight 0.8% quarterly rise in the trimmed mean, suggesting underlying price growth is running closer to 3.25% than the Reserve Bank's 3.5% assessment.

Colhoun also highlights that the pass-through from higher fuel prices into core measures has been slower than during the pandemic. Headline inflation fell more sharply as petrol prices declined through June, with fuel down 11% month on month after a 12% drop in May.