Australian Inflation Eases to 3.8%, Cooling Bets on an August Rate Hike

Australia's headline inflation eased to 3.8% in the 12 months to June 2026, down from 4.0% in the year to May, according to data from the Australian Bureau of Statistics. The Reserve Bank of Australia's preferred measure of underlying inflation, the trimmed mean, held steady at 3.6%, still above the central bank's 2% to 3% target band, a level it has not reached in more than four years. The softer-than-expected reading prompted money markets to pare back bets on another interest rate increase ahead of the RBA's August meeting. The central bank has already lifted the cash rate three times this year, in February, March and May, as it sought to bring inflation back to target amid higher travel and construction costs and elevated global energy prices. Governor Michele Bullock had warned only a day earlier that the bank remained prepared to act as required, including by raising rates further, if needed. Recent employment data showing a stronger-than-expected rise of 76,300 jobs in June has added to the RBA's complex balancing act.