The RBA has reduced the official cash rate to 4.1 percent, with Governor Michele Bullock advising caution against expecting immediate further cuts.

Australia's core inflation remained stable at 2.8 percent for the year ending January 2025, staying within the RBA's target band.

The Australian Bureau of Statistics reported that CPI inflation held steady at 2.5 percent year-on-year in January 2025.

The primary contributors to January's inflation were persistent housing and food prices, while the impact of electricity rebates appeared to diminish.

Westpac, one of Australia's major banks, forecasts a significant slowdown in inflation in the coming months.

Earlier this month, the Reserve Bank of Australia (RBA) cut interest rates, yet warned that inflation is likely to remain persistent while economic growth is expected to slow down.

In January 2025, Australia added approximately 44,000 new jobs; however, the unemployment rate rose slightly from 4 percent to 4.1 percent due to increased labor market participation.

The Consumer Price Index (CPI) excluding volatile items rose to 2.9 percent in January, up from 2.7 percent in December 2024.

Underlying inflation, measured by the annual mean trimmed CPI, also increased to 2.8 percent in January, compared to 2.7 percent the previous month.

Despite the recent rate cut, market expectations for another reduction in April 2025 are low, with only a 19 percent likelihood, although traders anticipate two additional cuts by year-end.

Governor Bullock acknowledged that the RBA acted too late in raising rates in 2022 and expressed a desire to avoid repeating that mistake.

She indicated that without the recent rate relief, core inflation would likely have fallen below the RBA's target range of 2 to 3 percent.