The Australian share market experienced a significant boost on Wednesday, fueled by encouraging inflation data that ignited speculation about a potential interest rate cut by the Reserve Bank of Australia (RBA) in February. The December quarter inflation figures, which came in below expectations, sparked optimism among investors and analysts.
The Australian share market surged higher on Wednesday, fueled by the latest quarterly inflation data which reignited hopes of an interest rate cut by the Reserve Bank of Australia (RBA) in February. The December quarter inflation figures came in below economists' expectations and the RBA's own forecast, sparking optimism that the central bank could ease monetary policy next month. This positive news overshadowed earlier concerns about a potential rate hike.
\In his post-CPI press conference, Treasurer Jim Chalmers highlighted the government's success in curbing inflation while maintaining a strong jobs market and stable economy. He acknowledged the government's 'very meaningful, very substantial and sustained progress' against inflation, seemingly taking a jab at market economists who predicted three rate hikes this year. Chalmers also addressed the issue of foreign investors in the Australian housing market, defending the government's stance against a temporary ban proposed by the Opposition. \Meanwhile, the closure of the entire Mosaic Brands portfolio has cast a shadow over the retail sector. The decision will result in the loss of almost 3,000 jobs and the closure of more than 700 retail stores across the country. Mosaic Brands cited the need to 'capitalise on and invest in' its remaining brands as the reason for the closures. \Alan Oster, chief economist at NAB, stated that the December quarter CPI is prompting his team to review the bank's February rate cut call. He emphasized the complexity of the situation for the RBA and cautioned against assuming a clear-cut outcome as financial markets seem to believe. Despite the potential for an early rate cut, Oster predicted four 25 basis point cuts over the next year, bringing the cash rate to around 3.3% by early 2026. \The market reacted positively to the better-than-expected inflation data, with analysts speculating on the likelihood of an RBA rate cut in February. RateCity found that there were 29 cuts to variable home loan rates between October and mid-December, suggesting that banks are already anticipating a shift in monetary policy. However, the extent to which banks will pass on any rate cuts to customers remains unclear.
Finance Economics AUSTRALIAN SHARE MARKET INFLATION INTEREST RATES RESERVE BANK OF AUSTRALIA ECONOMIC DATA TREASURER RETAIL SECTOR MOSAIC BRANDS RATE CUT MORTGAGES
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