Australians are set to get some generous mortgage relief with underlying inflation back within the Reserve Bank’s target for the first time in more than three years.
Headline inflation, also known as the consumer price index, remained steady at 2.4 per cent in the March quarter.
But the annual figures showed underlying inflation falling to 2.9 per cent, putting it back within the Reserve Bank’s 2 to 3 per cent target for the first time since late 2021 when Sydney and Melbourne were still in Covid lockdown.
This core measure of inflation stripping out volatile items has fallen back within the band, even without the government’s extended $75 a quarter electricity rebates.
Underlying inflation, known as the trimmed mean, is also within target for the first time since the December quarter of 2021 – before Russia invaded Ukraine and pushed up crude oil prices.
The futures market is expecting the Reserve Bank to cut interest rates again on May 20, a fortnight after this Saturday’s election.
The RBA cash rate is expected to fall to 2.85 per cent by Christmas for the first time since November 2022, which would imply five 25 basis point rate cuts.
With February’s rate cut factored in, the 150 basis points of relief in less than a year would be the most generous easing of monetary policy since 2012.
Australians are set to get some generous mortgage relief with underlying inflation back within the Reserve Bank’s target for the first time in more than three years
