🇦🇺❗️Cable FX Macro Weekly Note: Australia Consumer Prices

**As seen in Risk In The Week report 09/21/25, get full access now! 

Australia 2Q consumer prices showed an annual inflation rate of 2.1%. This represents a decrease from 2.4% in the March 2025 quarter and is the lowest level since early 2021. The quarterly CPI rose by 0.7% during this period. Trimmed mean inflation to 3.5% annually (from 3.2% in the prior quarter), now within the Reserve Bank of Australia's (RBA) target range of 2-3%.

This cooling trend supports expectations for potential RBA interest rate cuts, with markets anticipating 4-5 reductions in late 2025 to ease mortgage pressures. The next quarterly CPI release is scheduled for September 2025 (covering the quarter ending September), but a monthly CPI indicator for July 2025 showed a slightly higher annual rate of 2.8%, largely due to housing (+3.6%) and food (+3.0%). A full monthly CPI transition begins in November 2025 for more timely data.

Analysts at Rabobank noted that the Australian economy is in recovery with growth accelerating, with inflation converging on the midpoint of the Reserve Bank's target band of 2% to 3% and the labor market close to full employment. Rabo forecasts the RBA will deliver 25-basis- point cuts in November, February 2026, and May 2026, taking the cash rate down to a terminal rate of 2.85%, around the estimate of the neutral rate.