KONTAN.CO.ID - SYDNEY. Australian consumer prices rose at the slowest pace in almost four years in the December quarter, while a pullback in housing costs helped cool core inflation and open the door to a cut in interest rates as early as next month. Wednesday's benign price report saw markets price in an 80% probability the Reserve Bank of Australia would cut the 4.35% cash rate by a quarter point when it next meets on Feb. 18. That would be the first policy change in more than a year and the first easing since the depths of the pandemic. A fall in borrowing costs would also be welcomed by the Labor government which faces a tough election this year.
Local bonds rallied in reaction, while the Aussie dollar dipped 0.3% to $0.6228. The data from the Australian Bureau of Statistics showed the consumer price index (CPI) rose 0.2% in the fourth quarter, under forecasts of a 0.3% increase. Some of the moderation was due to government rebates on electricity and other subsidies, which will tend to reverse once they expire. Baca Juga: GLOBAL MARKETS - Tech Stocks, Dollar Rebound after DeepSeek-Triggered Selloff Annual inflation dropped to 2.4%, from 2.8% the previous quarter and a peak of 7.8% in late 2022, leaving it bang in the middle of the RBA's 2-3% target band. Crucially, a key measure of core inflation, the trimmed mean, increased by just 0.5% in the fourth quarter, the smallest rise since mid-2021. The annual pace slowed to 3.2%, helped by an easing in the cost of buying, building and renting homes. The central bank also likes to look at core inflation over two quarters annualised, and that was down at 2.6%. Just last month, the RBA board surprised many by saying it was more confident inflation was slowing as hoped and that might allow it to ease policy at some stage.
