Australia's April Core Inflation Remains at 3.4%, Above RBA Target Range; August Rate Hike Odds Drop to 50%

According to Jin10, Australia's April core inflation rate stood at 3.4% year-over-year as of May 27, remaining above the Reserve Bank of Australia's 2%-3% target range midpoint. The trimmed mean inflation metric matched economist expectations. Interest rate swaps now price in a 50% probability of an August rate hike, down from 64% before the data release.

The Australian Bureau of Statistics noted fuel prices remain 23.5% higher than pre-Middle East conflict levels, with elevated oil costs flowing through transportation and logistics-related goods and services. Unemployment rose to a four-and-a-half-year high in April, and about one-third of businesses reported declining revenue over the prior four weeks. Markets expect the RBA to hold its cash rate at 4.35% in June after raising rates in all three prior meetings.