Data suggests RBA likely to extend pause
SYDNEY: Australia’s inflation came in faster than expected in April, suggesting price pressures remain stubbornly strong and bolstering the case for the Reserve Bank to keep interest rates at a 12-year high next month.

The monthly consumer price indicator advanced 3.6% from a year earlier, exceeding economists’ estimate of 3.4%, data from the Australian Bureau of Statistics showed yesterday. The core measure, which strips off volatile items, held at 4.1%

The Australian dollar rose while yields on the policy-sensitive three-year government bond also gained.

Money markets are pricing no rate cut until the second half of 2025.

From Washington to Wellington, consumer prices are proving tougher to return to target than markets had anticipated at the start of the year.

Yesterday’s result comes after minutes of the Reserve Bank of Australia’s (RBA) May meeting showed the board resumed discussing a rate increase.

The RBA has held its cash rate at 4.35% since a surprise hike in November, pointing out that aggregate demand still exceeds the economy’s supply capacity.

The central bank remains in data-dependent mode, with inflation still above the 2% to 3% target, but has also signalled the bar for a further hike is quite high. — Bloomberg
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Australia’s inflation came in faster than expected in April, suggesting price pressures remain stubbornly strong and bolstering the case for the Reserve Bank to keep interest rates at a 12-year high next month.