Australia’s Monthly CPI Holds at 4-Month High

Australian CPI Data Overview

The latest Australian Monthly CPI data released today showed a 2.5% year-on-year increase in January 2025, unchanged from the previous month and slightly below market expectations of 2.6%. This keeps Australia’s inflation rate at a four-month high.

Excluding volatile items such as food and energy, core CPI rose by 2.9%, marking the highest level in five months following a 2.7% increase in December. Meanwhile, the trimmed mean CPI, an alternative measure of underlying inflation that smooths out irregular or temporary price fluctuations, came in at 2.8% in January, up from 2.7% in December.

(Australia Monthly CPI Chart; Source: Australia Bureau of Statistics)

RBA Outlook: What’s Next?

While the latest CPI data does not provide a strong case for increasing bets on RBA rate cuts, the steady inflation—without significant acceleration or slowdown—reinforces the Reserve Bank of Australia’s (RBA) cautious stance from its February meeting.

The CPI figures largely align with the RBA’s inflation forecast trajectory, suggesting that the central bank will likely remain on hold, carefully assessing upcoming data and external risks before making further policy adjustments.

During its February meeting, the RBA stated that:

• “Do not expect further rate cuts” after delivering its first cut
• Emphasizing the need to evaluate further economic data before taking action.

The market currently anticipates that the RBA’s second rate cut will only come in mid-2025, likely after the Q1 2025 inflation data release on April 30.

Technical Outlook on AUDUSD

The Aussie dollar saw little reaction to the CPI release, as minimal inflation changes failed to drive major moves. In the near term, AUD remains driven by USD strength and market sentiment.

Uncertainty over Trump’s trade policies has weighed on risk-sensitive currencies like the AUD, NZD, and CAD, limiting upside potential.

(AUD/USD, H4: Chart Analysis; Source: Trading View)

Technically, AUD/USD remains in an uptrend after breaking above 0.6320. As long as this support holds, the pair may continue its bullish trajectory, supported by a weaker USD.

A break below 0.6320 or a US Dollar rebound could shift momentum, but otherwise, AUD/USD may target 0.6400 in the near term.

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