Q2 CPI Supports RBA Path

• Headline CPI rose 0.7% over the June quarter, slightly below market expectations. Annual inflation is now at 2.1%, the bottom of the RBA’s 2–3% target band.
• The RBA’s preferred measure, the Trimmed Mean, rose 0.6% in Q2, taking the annual pace to 2.7%.
• On a six-month annualised basis, core inflation sits at 2.6%, suggesting underlying momentum is on track with the RBA’s target.
• In her recent Anika Foundation speech, Governor Bullock noted the Q2 inflation data would help assess whether inflation is “on track” to decline gradually toward 2.5%. Yesterday’s print supports this view, reaffirming market positioning for a August rate cut.
• US bond yields lifted after the FOMC held rates steady, with Chair Powell striking a hawkish tone that pared back hopes of a September cut, despite two dissenting votes against maintaining the current rate.