Australia’s Inflation Slightly Edge Higher in 2Q

Australia’s inflation slightly edge higher than expected in the second quarter (2Q) of the year. The situation daunted the possibility of the Reserve Bank of Australia cutting interest rates as widely speculated.

The consumer price index which measures inflation rose 0.4 percent in the second quarter. The figures were issue by the Australian Bureau of Statistics on Wednesday.

Year-on-year, inflation rose 1 percent in the second quarter, below 1.1 percent predicted by economists. This is the lowest yearly inflation rate since the second quarter of 1999.

However, some experts believe the consumer prices is not entirely bad and may not necessitate further rate cut in soon. At least the financial markets have started pricing out the possibility of the central bank not cutting interest rates on August 2.

The odds of cash rate reduction dropped from 65 percent to 50 percent after the report was released. Australian 10-year bond weakened by 3.5 ticks.

The Australian dollar rose 0.3 percent to 75.64 cents against the US dollar, before retreating to 74.56 cents.

The ASX 200 plunged 0.11 percent to 5331.2.