Inflation Data Spurs Talks on Future Interest Rates
Inflation Data Spurs Talks on Future Interest Rates
5
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
As Australians wrestle with persistent cost-of-living challenges and elevated interest rates, there may be some optimism on the horizon with expected reductions in inflation rates.
The Australian Bureau of Statistics is set to unveil the Consumer Price Index (CPI) for April on Wednesday. This monthly indicator offers an early glimpse into inflation trends, even though it does not encompass all price dynamics.
CommSec economists highlighted the significance of this measure, noting that despite its limited representation of the services sector, it remains one of the most prompt indicators for inflationary pressures.
Financial markets might experience reduced trading volumes ahead of public holidays in the US and UK on Monday.
The latest CPI data is expected to be a vital discussion point when the Reserve Bank of Australia’s (RBA) Assistant Governor for Economics, Sarah Hunter, addresses a conference in Sydney on Thursday. The RBA board is slated to discuss interest rates again in mid-June, amid ongoing concerns over inflation levels that surpass the 2-3% target band.
Federal Treasurer Jim Chalmers anticipates that, owing to measures in the 2024/25 budget, inflation will retreat back to the acceptable range by year's end. These measures include a notable $300 energy bill rebate for households starting July 1.
Despite these initiatives, the RBA has pointed out that while inflation decelerated in the March quarter, the pace remains slower than desired. Hence, the bank is poised to adopt further interest rate hikes if circumstances oblige. The current cash rate stands at 4.35%, a stark rise from 0.35% as of May 2022, initiated after inflation peaked at 7.8% in December 2022.
Other crucial economic statistics set to be released this week include retail trade figures and building approvals for April. Additionally, data on March quarter construction work and private capital expenditure, both of which feed into the next quarterly economic growth report, are due.
Taking a cue from a positive consumer sentiment report in the US, the Australian share market is primed for a stronger opening on Monday. The University of Michigan's latest findings suggest improved public expectations around inflation decreases, catalyzing a resurgent Wall Street in Friday trading.
The US's Dow Jones Industrial Average ticked up 4.33 points to 39,069.59, with the S&P500 adding 36.88 points to 5,304.72 and the Nasdaq Composite climbing 184.76 points to 16,920.79. Meanwhile, the ASX SPI200 index futures contract saw a 47-point rise to 7798, laying the groundwork for a robust market performance on Monday.
Nevertheless, light trading is anticipated ahead of public holidays in major markets. Australia's S&P/ASX200 index closed down on Friday, falling 84.2 points to 7,727.6, while the broader All Ordinaries index shed 83.9 points to 7,999.2.
Sources for this article include reporting by Tess Ikonomou and Kaaren Morrissey for AAP.
Published:Monday, 27th May 2024 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
Commonwealth Bank of Australia (CommBank) has strengthened its commitment to environmental sustainability by expanding its Green Home Offer through a renewed partnership with the Clean Energy Finance Corporation (CEFC). This collaboration introduces enhanced financial incentives for homeowners aiming to improve their property's energy efficiency. - read more
The Australian Securities and Investments Commission (ASIC) has intensified its efforts to regulate financial content on social media by issuing warning notices to 18 'finfluencers'-individuals who use social media platforms to discuss financial products and investments. These actions are part of a coordinated international initiative targeting unlicensed promotion of high-risk financial products. - read more
Virgin Australia has unveiled its 'Pets in Cabin' service, a pioneering initiative that allows passengers to travel with their pets in the aircraft cabin on select domestic routes. This service caters to Australia's substantial pet-owning population, offering a more comfortable and convenient travel option for both pets and their owners. - read more
Understanding interest rates is crucial when it comes to managing your personal loans effectively. Interest rates dictate the cost of borrowing and can significantly influence your financial health over time. - read more
Financial harmony involves the smooth and balanced management of personal finances, where debts and savings are optimally aligned to achieve financial stability and peace of mind. - read more
Understanding the concept of creditworthiness is essential, especially when considering the various financial decisions you make in life. In Australia, a good credit score can open doors to competitive loan rates, favorable mortgage terms, and hassle-free approvals for financing. Conversely, bad credit can be a significant roadblock, impacting your financial well-being and limiting your access to financial resources when you need them most. - read more
