Hopes for back-to-back rate cuts by the Reserve Bank of Australia (RBA) were weakened on Wednesday after April’s inflation data came in higher than expected—a surprise development in a month typically known for seasonal price pressures.
According to the Australian Bureau of Statistics, the trimmed mean inflation—a key measure closely tracked by the RBA—rose more than anticipated. The Consumer Price Index (CPI), excluding volatile items like fuel and holiday travel, climbed 2.8% over the 12 months to April, up from 2.6% in March. The overall CPI also beat market expectations slightly, coming in at 2.4% instead of the projected 2.3%.
Why This Matters for Borrowers and Homeowners
For borrowers and homeowners hoping for cheaper lending rates, this inflation reading dims the immediate outlook. David Bassanese, Chief Economist at BetaShares, called the result “mildly disappointing” and suggested it likely rules out a rate cut in July.
“With US tariff concerns easing and the next key inflation report due in late July, it was already unlikely the RBA would cut rates in July – unless faced with an economic emergency,” said Bassanese.
The RBA began easing rates earlier this year, reducing the cash rate from 4.35% to 3.85% between February and May. However, this inflation result suggests a pause before further easing resumes.
If you’re based in Mulgrave, or nearby suburbs like Springvale South, Oakleigh South, Clarinda, Mount Waverley, or Noble Park, now is a good time to review your financial situation. With interest rate changes on hold for the short term, borrowers in these areas should consider how current rates can be used strategically – especially for refinancing or securing new finance.
Still Room for Optimism in the Medium Term
Despite the setback, economists still predict more rate relief later this year. Bassanese maintains his view that the RBA will deliver at least two more rate cuts, likely in August and November, if inflation trends align with the 2–3% target range.
“Given softening trends in housing and labour costs, I still foresee further reductions in underlying inflation,” he noted.
What’s Driving the Numbers?
- Housing inflation rise to 2.2% in April from 1.8% in March.
- Rent inflation slightly eased to 5.0%, compared to 5.2% in March—the slowest annual growth since February 2023. This easing is consistent with rising vacancy rates in cities like Melbourne.
- Electricity prices dropped 6.5% year-on-year, following a 9.6% fall in March, due to ongoing government rebates.
These mixed signals suggest the RBA will continue to act cautiously and base decisions on quarterly CPI releases.