Core inflation rose 0.8% quarter-on-quarter, undershooting RBA forecasts and reducing pressure for further tightening.
The Australian Dollar weakened after core inflation data missed expectations for the second straight quarter, easing pressure on the Reserve Bank of Australia to raise rates. The trimmed mean measure of core inflation increased by 0.8% quarter-on-quarter and 3.6% annually, below the RBA’s May projections.
Market-implied odds for a final RBA rate hike in late 2026 have fallen to near 50%, as the softer inflation print provides policymakers with a more favorable starting point for updated economic forecasts. While inflation remains above target, the data reduces urgency for additional tightening.
The AUD, previously supported by AI-driven demand, declined overnight following the release, reflecting diminished expectations for further monetary policy action.