The Australian Consumer Price Index is set to ease in the second quarter, with a reduced interest rate in May
- The monthly consumer price index in Australia is 2.3%in March.
- Quarter CPI inflation will facilitate less than 3%, with the main areas fulfilling the purpose of the RBA.
- The Australian Reserve Bank will gather in mid -May to decide on monetary policy.
- The Australian dollar relieves its American rival after reaching the peak of 2025.
Australia will release several inflation indicators on Wednesday, and financial markets require price pressure, which extends further in early 2025, paving the way for cutting the Australian Reserve Bank (RBA) interest rates. The central bank is intended to meet monetary policy on 19-20. May.
The Australian Statistical Bureau (ABS) publishes two different inflation meters: the quarterly consumer price index (CPI) in the first quarter of 2025 and March CPI, which measures annual price pressure over the last twelve months. The quarterly report contains the RBA truncated medium CPI, a favorite inflation meter for policy makers.
The RBA has retained 4.10%of the official cash rate (OCR), if it lasted in early April, after the offer of 25 base points (BPS) in February, the first after the hiking cycle that began in 2022.
What to expect in terms of Australian inflation rates?
ABS is expected to announce that the monthly CPI rose by 2.3% in March, which is posted by 2.4% in February. Quarter CPIs are not increased by a quarter of the quarter (QOQ) and 2.2% a year ago (YOY) in the first quarter of 2025. In addition, the preferred gauge of the central bank is assumed, RBA trimmed average CPI, rising by 2.9% by Yoy with Q4, which is 3.2% in the previous quarter.
Finally, the average CPI truncated RBA is estimated at 0.7% qoq, which is higher than that has previously been posted 0.5%. However, the numbers are included in the RBA's goal of inflation between 2 and 3%, which means that the central bank could provide additional interest rates in the near future.
In the meantime, economic activity measured by the country's total product (GDP) increased modestly in the last quarter of 2025, as GDP grew by 0.6% in real terms, exceeding the market expectations of 0.5% and marking the strongest performance from December 2022. The annual growth rate also exceeded a 1.3% forecast of 1.2%. The ghost of the recession jumped a modest progress, although the economy is not yet out of the forest.
Finally, it is worth adding that the RBA's recent forecasts Australian GDP growth is about 2.2% in 2025. In addition to the purpose of central bank inflation, TupS growth has been part of the decision of the policy makers to cut interest rates to prevent a steep economic setback.
In the meantime, President Donald Trump, the US (US) President of the United States, began a global trade war. After the announcement of the tariffs in the neighboring countries, Trump triggered mutual tariffs for most trade partners. Australia fell into a 10% baseline tax, facing a 25% tariff for total steel and aluminum exports to the US. But most of the tension is between China and the US, hundreds of tariffs. China is the main trading partner of Australia and the local economy may suffer from tension between the world's largest economy.
In addition, the impact of the trade war on the US economy is maintaining the US Dollars (USD) hind legs. In April, the USD fell to the fresh 2025 against most of the major competitors and retains its soft tone, regardless of the market.
RBA governor Michelle Bullock noted: “If there are large tariffs in China, China's trade is likely to try to find other ways to find out.
How could the Consumer Pricing Index report be affected by AUD/USD?
Inflationary indicators are usually crucial. The relief of inflationary pressure should contribute to the reduced RBA speed in May.
In general, the higher CPI figures would be a bullish in the midst of the pike rba expectations. But there is also the opposite scenario: inflation relieves the policy makers more towards the attitude of Dovind.
By directing the CPI into the outlet, the AUD/USD pair trades around 0.6400, with a fresh retreat of 0.6450 a year.
Fxstreet chief analyst Valeria Bednarik says: “AUD/USD pair brings together profits and, despite intradaist, is firmly in place.
Bednarik adds: “AUD/USD pair should find the original in the near future in the 0.6340 area, with slides revealing 0.6280 price zones where Bullish 20 simple moving medium (SMA) concentrates flat 100 SMA.
Australian Dollar Fuck
One of the most important factors in the Australian Dollar (AUD) is the level of interest rates set by the Australian Reserve Bank (RBA). As Australia is a resource -rich country, the second key manager is the price of its largest export, iron ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as Australian inflation, its growth rate and trade balance. Market minds-investors accept more risky assets (risk-on) or are looking for safe Haven (risk-field) -s factor, which is a positive risk for AUD.
The Australian Reserve Bank (RBA) affects the Australian dollars (AUD), setting Australian banks to borrow to each other. This affects the level of interest rates for the entire economy. The main purpose of the RBA is to maintain a stable inflation rate of 2-3%by adjusting the interest rates up or down. Relatively high interest rates compared to other major central banks support AUD and the opposite relatively low. Quantitative alleviation and effort with the former AUD negative and another can also be used to influence the credit conditions.
China is the largest trading partner in Australia, so the health of the Chinese economy is a significant impact on the Australian dollar value (AUD). If the Chinese economy is doing well, it buys more raw materials, goods and services in Australia, raising the demand for AUD and pushing its value. The opposite is that the Chinese economy does not grow as fast as it was thought. Therefore, positive or negative surprises of Chinese growth data are often a direct impact on the Australian dollar and its couples.
Raudmaa ore is the largest export of Australia, which, according to the 2021 data, is $ 118 billion a year, which is the main destination of China. Therefore, the price of iron ore may be the Australian dollar leader. In general, AUD also rises the price of iron ore as the demand for all currency is increasing. The opposite is the case when the price of iron ore falls. Higher prices for iron ore also cause Australian positive trade balance, which is also positive for AUD.
A trade balance, which is a difference between what the state earns from its exports compared to what it pays for imports is another factor that can affect the value of the Australian dollar. If Australia produces highly coveted exports, it becomes a purely surplus demand from foreign buyers who want to buy their exports compared to what it spends to buy imports. Therefore, the positive net trade balance is strengthened by the AUD if the trade balance is negative.
Rba
The Australian Reserve Bank (RBA) sets interest rates and manages Australian monetary policy. Decisions are made by the Board of Governors at 11 meetings a year and, as needed, AD HOC emergency meetings. The main mandate of the RBA is to maintain price stability, which means inflation rate of 2-3%, but also “. Its main tool to achieve it is to increase or lower interest rates. Relatively high interest rates strengthen the Australian dollars (AUD) and vice versa. Other RBA tools include quantitative relief and exertion.
When inflation was always a negative factor in currencies, as it lowers the value of money in general, the opposite of the relaxation of cross -border capital use has nowadays. Moderately higher inflation now tends to set interest rates in central banks, which in turn attracts more capital inflow from global investors looking for a profitable place to keep their money. This increases the demand for the local currency, which in Australia is the Aussie dollar.
Macroeconomic data measures the health of the economy and can affect the value of its currency. Investors prefer to invest in their capital economy, which is more safe rather than growing rather than uncertain and shrink. Higher capital inflow increases the total demand and value of its own currency. Classical indicators such as GDP, production and service PMI, employment and consumer emotional studies may affect AUD. A strong economy can encourage the Australian Reserve Bank to set interest rates by supporting AUD.
Quantitative alleviation (QE) is a tool used in extreme situations where interest rates are not sufficient to restore credit flow in the economy. QE is a process in which the Australian Reserve Bank (RBA) prints Australian dollars (AUD) asset-asset funding for government or corporate bonds from financial institutions, thereby providing them with the necessary liquidity. QE results in a weaker audience.
Quantitative effort (QT) is the opposite of QE. This is done after the QE, when the economic recovery is underway and inflation begins to rise. When QE buys the Australian Reserve Bank (RBA), the bonds of the Government and Business of Financial Authorities are purchasing to provide them with liquidity, the RBA RBA will stop buying more assets and stop reinvesting, which is reinvesting, which matures on the bonds already in possession. It would be positive for the Australian dollar (or bullish).
