Australia’s core inflation rate in October was stronger than expected, suggesting that the Reserve Bank of Australia will remain on hold to assess whether the economy is overheating.
The closely watched trimmed mean consumer price index, which strips out volatile items, rose 3.3% year-on-year, official data showed on Wednesday. The increase, which was above the Reserve Bank of Australia’s 2-3% target range and higher than the 3% forecast, lifted the Australian dollar and the yield on three-year government bonds, which are sensitive to policy.
Data shows that the Reserve Bank of Australia’s (RBA) assessment supports the setback in its efforts to curb core inflation and prompts the money market to increase the possibility of the central bank maintaining interest rates unchanged in the foreseeable future. A few economists, such as those from Goldman Sachs and Commonwealth Bank of Australia, believe that the easing cycle has ended, but most economists expect another rate cut around mid-2026.
Data shows that the overall inflation rate is 3.8%, which also exceeds expectations.
Sunny Nguyen, chief economist for Moody’s Analytics in Australia, said: “Deflation has stalled. For an institution that has just acknowledged that its previous inflation forecasts no longer align with current data, the October figures again point to the persistence of inflation. The market may conclude that any discussion of easing policies will be postponed until the second half of 2026.”
“Unfortunately, inflation has risen so high that the Reserve Bank of Australia may have to seriously consider raising interest rates,” said Kalam Pickering, an economist at global job search website Indeed Inc. “While it’s not certain yet, households should prepare for the worst Christmas gift.”
Harry Murphy-Crowe, the head of economic research at Oxford Economics, also agrees with this view. On Tuesday, the Commonwealth Bank of Australia said that if price pressures remain strong and the labor market tightens further, the Reserve Bank of Australia may raise interest rates next year.
Since the beginning of this year, the Reserve Bank of Australia (RBA) has cut interest rates three times, bringing the cash rate down to 3.6%. Currently, the bank remains cautious and data-dependent. The RBA’s most recent rate cut was in August. Given that price pressures have risen again, the RBA has indicated that it is unlikely to cut rates further in the short term.
Technical analysis:
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Gold: We continue to pay attention to the corrective rebound in price. Short-term momentum breakouts are worth participating in. If the price pulls back to around 4100, it should also be a good opportunity to participate in a defensive buy in the demand zone. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: Yesterday, we suggested a direct buy when the plugin turned blue, which would at least achieve a profit-to-loss ratio of more than 2 times. Today, we recommend reducing the long position and setting a protective stop, then continue to hold. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Yesterday, the price broke through the green demand zone we were expecting, but then rebounded and recaptured that area. For today, we should be more cautious about participating in the long position. It is recommended to wait until the price recovers above 59 before considering a buy signal on a pullback. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Key economic data and events to focus on today:
21:30 US October Durable Goods Orders (initial)
