The underlying inflation of Australia was reduced more than expected in the last three months of 2024, which opens the door to a cut of interest rates as soon as next month and lowers the currency.
The annual average cut from consumer prices, which eliminates volatile items, rose 3.2% in three months to December, compared to an expected increase of 3.3%, as the Australian office data showed on Wednesday of statistics. In quarterly terms, consumer prices rose 0.5%, compared to 0.6% planned.
The Reserve Bank, which aspires to be at the midpoint of the 2-3% target of the CPI, focuses on the underlying inflation, since government subsidies are containing general prices. The average trimmed IPC has not been inside the band since the late 2021.
The currency fell and the profitability of the public debt at three years, sensitive to monetary policy, lowered 6 basic points after the publication. The actions expanded the profits, since the monetary markets increased bets on a type cut in February to almost 90%.
The result will reinforce the growing confidence of the RBA in which inflation is in the process of returning sustainably to the objective within a reasonable period. At their last December meeting, political leaders adopted a more moderate position and discussed scenarios in which the types could lower or stay at the current restrictive levels.
They considered that either of the two results was plausible and chose to maintain the types at 4.35%, the highest level in 13 years since the late 2023.
The annual prices of services are kept at 4.3%, led by rentals, medical and hospitable services and insurance, ABS said.
The report also showed that non -discretionary goods and services fell 0.5% during the quarter, while discretionary rose 1.1%, Marking the first time in almost four years that inflation in non -discretionary articles is lower than that of discretionary.
This underlines the recent data that consumer spending has rebounded, while the labor market has remained strong, which points to the risk of inflationary pressures. The Australian Reserve Bank is sensitive to the possibility that consumption reactivation and the strength of the labor market are combined to frustrate efforts to reduce underlying inflation to the objective.
At the same time, Australia will soon go to the polls and economists fear that both political sides will be tempted to trigger large spending initiatives to try to influence elections that are foreseen at odds.
The Bank of the Australian reserve opted for a maximum type lower than that of its world counterparts, since he was worried about the ability of very indebted homes to deal with significantly higher mortgage quotas.
Australia has been an atypical case in the current cycle, since most central banks in developed countries, Including the Federal Reserve, their types have already relaxed substantially. The Federal Reserve will announce the results of its meeting today and is expected to stay out.
The RBA reference scenario is that unemployment reaches a maximum of 4.5% this year, compared to the current 4%. In November, the Central Bank predicted that the average cut would end 2024 at 3.4%, Before relaxing to the top of the target of inflation in mid -2025. The Bank will publish forecasts updated on February 18, together with its decision on interest rates.
