The Reserve Bank of Australia (RBA) said that it was awaiting two vital pieces of data before lowering rates: the June labour force report and the Q2 CPI inflation print.
The June labour force figures printed weaker than expected, with the headline unemployment rate rising to 4.31%—above the RBA’s latest projection.
Full-time jobs contracted sharply, the underemployment rate rose, and hours worked fell.
This left the RBA waiting on one final piece of data: the Q2 CPI print. Given the poor labour market data, the RBA was certain to cut if the policy-relevant trimmed mean inflation printed at or below expectations.
Alas, the Australian Bureau of Statistics (ABS) has released the Q2 CPI, which met expectations.
Headline CPI rose by 0.7% in Q2 to be 2.1% higher year-on-year, in line with expectations.
Trimmed mean inflation rose by 0.6% over the quarter to be 2.7% higher year-on-year:
Both headline and trimmed mean inflation are tracking within the RBA’s inflation target of 2% to 3%.
The result all but ensures that the RBA will cut rates at next month’s August monetary policy meeting.
