Australia's annual inflation remained elevated at 3.8% in January, driven largely by a 19% spike in electricity costs following the end of government subsidies, prompting financial markets to increase odds of Reserve Bank rate hikes in May and August to potentially reverse 2025's rate cuts. Reserve Bank Governor Michele Bullock said authorities would take time to determine the next policy move, characterizing inflation as "a little bit elevated" but not "taking off again," though economists warn persistent price pressures in essentials and construction could necessitate additional rate increases.
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Australia's annual inflation remained elevated at 3.8% in January, driven largely by a 19% spike in electricity costs following the end of government subsidies, prompting financial markets to increase odds of Reserve Bank rate hikes in May and August to potentially reverse 2025's rate cuts. Reserve Bank Governor Michele Bullock said authorities would take time to determine the next policy move, characterizing inflation as "a little bit elevated" but not "taking off again," though economists warn persistent price pressures in essentials and construction could necessitate additional rate increases.