Aussie mortgage holders may see rate cuts as inflation falls
Aussie mortgage holders may see interest rate cuts soon as inflation figures drop, with latest data showing the trimmed mean inflation rate fell to 3.2 per cent.
Aussie mortgage holders could potentially benefit from a rate cut as soon as February, following new data indicating that inflation is declining more quickly than expected.
The latest underlying inflation figures from the Australian Bureau of Statistics, released on Wednesday, registered at 0.5 per cent for the December quarter.
The annual trimmed mean inflation rate decreased to 3.2 per cent, down from 3.5 per cent in the September quarter.
This outcome surpasses the Reserve Bank's earlier expectation that Australia's trimmed mean inflation would be at 3.4 per cent for the 12 months leading up to December, alongside 0.7 per cent for the final quarter of the year.
Michelle Marquardt, head of price statistics at ABS, stated that Australia's trimmed mean inflation is on a downward trend.
“The trimmed mean excluded price decreases in both electricity and automotive fuel this quarter, in addition to other significant price fluctuations,” Ms Marquardt noted.
“Consequently, the trimmed mean annual inflation of 3.2 per cent was higher than the CPI inflation of 2.4 per cent.”
Shane Oliver, chief economist at AMP, mentioned to NewsWire before the announcement that any figure below 0.7 per cent paves the way for an earlier unexpected reduction in the official cash rate of 4.35 per cent during the RBA board's meeting from February 17-18.
“The RBA needs to witness a trimmed mean inflation rate of 0.6 per cent for the quarter or less,” Dr Oliver highlighted.
“The focus is not on the headline number, which we know will be low because of energy rebates.”
Before the announcement, market forecasts suggested that the quarterly inflation rate would likely be below the RBA's estimate at 0.5 to 0.6 per cent for the quarter.
The quarterly growth in recreation and culture was primarily driven by a rise in domestic holiday travel and accommodation, which increased by 5.7 per cent.
Additionally, the hike in alcohol and tobacco prices was largely attributed to tobacco, with a 5.8 per cent rise reflecting the 5.0 per cent annual increase in tobacco excise and biannual indexation based on Average Weekly Ordinary Time Earnings starting from 1 September 2024.
