Softer Inflation Data Cools Rate Hike Expectations for August

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

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%

The softer-than-expected figures prompted financial markets to further unwind expectations of an imminent rate increase, supporting Australian equities while weighing on the Australian dollar and government bond yields.