Australia’s path toward interest rate relief became clearer after the latest trimmed mean annual inflation rate fell to 2.7%, its lowest level since December 2021, according to the Australian Bureau of Statistics. This result marks the second consecutive quarter that inflation has stayed within the Reserve Bank of Australia’s (RBA) target range of 2–3%, fueling expectations for a rate cut in August.
Economists say this development could provide much-needed relief to millions of mortgage holders facing financial pressure. With the RBA’s next meeting scheduled for 11–12 August, attention is turning to how policymakers, led by Governor Michele Bullock, will respond to the data and the growing calls for action.
Economists Signal a Likely Rate Cut
Following the release of the June-quarter figures, several leading economists confirmed that the conditions now favor a rate reduction. Bendigo Bank chief economist David Robertson said the data “should assure an RBA rate cut in August,” and even suggested the possibility of a 35-basis-point cut, which would reduce the cash rate to 3.5%.
Betashares chief economist David Bassanese, who correctly predicted the RBA’s rate hold in July, called the figures “good enough” for a cut. He noted that while inflation at 2.7% is slightly above the RBA’s May forecast of 2.6%, it still justifies an easing of what the bank itself has described as “modestly restrictive” interest rates.
Inflation Slows to its Lowest in Years
The trimmed mean inflation rate slowed from 0.7% to 0.6% in the June quarter, the lowest since December 2021. This downward trend in underlying inflation has strengthened confidence among economists that the RBA now has the room it needs to reduce rates without risking a reversal in progress.
KPMG chief economist Brendan Rynne added that weak consumer and business confidence underscores the urgency for rate relief, arguing that “today’s CPI outcome should give the RBA all the comfort it needs to drop the cash rate at its next meeting.”
Impact on Mortgage Holders and the Size of the Cut
The potential August cut could be a turning point for mortgage holders who have faced high repayments for more than a year. Millions of households have been closely monitoring the Consumer Price Index (CPI), with economists stating that any figure below 0.7% quarterly inflation would “open the door for further rate relief.” While a 25-basis-point reduction remains the most likely scenario, David Robertson’s call for a 35-basis-point move has drawn attention, describing it as “a sensible compromise” between the RBA’s cautious stance and the urgent need for relief.
These developments come as many families look for signs of easing financial pressure amid persistently high living costs and reduced spending confidence across the country. The prospect of a larger-than-usual cut highlights how significantly inflation’s decline has shifted the economic outlook ahead of the RBA’s upcoming decision.
