RBA Rate Cut? Don’t Count on It - Aussie Dollar Outlook

The latest Australian CPI data just dropped—and it’s hot. Year-on-year inflation came in at 2.4%, slightly above expectations. Quarter-on-quarter CPI surprised to the upside at 0.9%, beating the forecast and climbing well above the previous 0.2% reading. Even the trimmed mean CPI outpaced expectations.

To me, this confirms what I’ve been saying all along: a rate cut from the RBA is looking less and less likely. Despite market chatter and some analysts pricing in multiple cuts this year, I’ve been firm—maybe one cut if things get ugly, but realistically, we’re not getting any. The only reason the RBA even cut earlier this year was public pressure over rising costs. Now that inflation is holding up, they’ve got no reason to move.

The market reacted quickly. The Australian dollar jumped, particularly against the CAD, JPY, and CHF. It would’ve rallied even more if not for soft Chinese manufacturing data pulling some of the momentum back. Still, I expect AUD strength to continue in the near term.

The takeaway? Stay sharp. These CPI numbers change the game—and any hopes of near-term easing from the RBA just got thrown out the window.

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