While other central banks have reacted to a sudden drop in inflation, the Reserve Bank of Australia has been reluctant to move, raising questions about whether it may leave rates too high as the economy cools.
Despite core inflation still sitting well above target, there's a better than even chance the official cash rate will be cut within weeks.
Headline inflation was way down at 2.6 per cent, a couple of points lower than our latest reading of 2.8 per cent. They're the kind of levels that look as though the inflation scourge has been well and truly whipped. Those odds dropped by Friday as markets began reassessing the impact of a Trump presidency on inflation. But they were still factoring in an odds-on chance Fed chair Jerome Powell would deliver a pre-Christmas cut.
RBA governor Michele Bullock says she didn't "caution" the government about its spending, and its attitude on spending is "the right one".Australia is the most sensitive nation in the developed world when it comes to interest rate movements. That's because, unlike most other nations which have fixed interest rates for the life of the loan, the vast bulk of our home loans are on variable rates.
But that doesn't mean goods and services are suddenly going to become more affordable. It simply means the price rises we've experienced over the past few years will slow. Failing to recognise the difference between inflation and living costs was a fundamental mistake the Biden-Harris administration made during its election campaigning. And it's a mistake the Albanese government looks to be repeating, trying to convince voters that the worst is behind them.
Inflation Wages Growth Luci Ellis Michele Bullock Albanese Government Interest Rates Commonwealth Bank Cash Rate Target
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