RBA Rate Hike Expectations Plummet as Inflation Comes in Below Forecast

Australia's underlying inflation rate rose to a two-year high in the June quarter but came in below expectations, sharply reducing the likelihood of another interest rate hike by the Reserve Bank of Australia (RBA) in August.

The annual trimmed mean inflation increased to 3.6% in the June quarter, up from 3.5% in the March quarter, but below the 3.7% forecast by economists and the RBA's own projection of 3.8%.

Federal Reserve Bank governor Michele Bullock acknowledged weakness in housing and employment conditions while declining to explicitly describe the August meeting as 'live', a signal that rate hike expectations have been significantly reduced.