{"id":307516,"date":"2026-01-28T06:22:06","date_gmt":"2026-01-28T06:22:06","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/307516\/"},"modified":"2026-01-28T06:22:06","modified_gmt":"2026-01-28T06:22:06","slug":"australias-hotter-q4-core-inflation-fuels-bets-for-rate-hike-next-week","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/307516\/","title":{"rendered":"Australia&#8217;s hotter Q4 core inflation fuels bets for rate hike next week"},"content":{"rendered":"<ul data-testid=\"Summary\" class=\"summary-module__summary__QjADA\">\n<li data-testid=\"Body\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf summary-module__point__UgXPz\">Core Q4 inflation rises to uncomfortable level, puts RBA on high alert<\/li>\n<li data-testid=\"Body\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf summary-module__point__UgXPz\">Headline inflation also accelerates in December, lifts annual pace to 3.8%<\/li>\n<li data-testid=\"Body\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf summary-module__point__UgXPz\">Markets raise bets for rate hike next week to 73% from 60% before<\/li>\n<\/ul>\n<p>SYDNEY, Jan 28 (Reuters) &#8211; Australia&#8217;s underlying inflation ran at a faster-than-expected pace in the December quarter, adding to a recent slew of hot economic data that has investors baying for an interest rate hike as soon as next week.<\/p>\n<p>The firm data prompted ANZ and Westpac to call for a quarter-point rate hike from the Reserve Bank of Australia when it next decides on policy on February 3, joining the Commonwealth Bank of Australia and the National Australia Bank.<\/p>\n<p data-testid=\"promo-box\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf article-body-module__promo-box__hVl8h\"> Sign up  <a data-testid=\"Link\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/world\/asia-pacific\/australia-core-inflation-tops-forecasts-stokes-risk-rate-hike-2026-01-28\/undefined?location=article-paragraph&amp;redirectUrl=%2Fworld%2Fasia-pacific%2Faustralia-core-inflation-tops-forecasts-stokes-risk-rate-hike-2026-01-28%2F\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC\" rel=\"nofollow noopener\" target=\"_blank\">here.<\/a><\/p>\n<p>Swaps now imply a 73% probability for a hike, compared with 60% before.<\/p>\n<p>The trimmed mean consumer price index (CPI), a policy-relevant measure of core inflation, rose 0.9% in the fourth quarter from the quarter before, Australian Bureau of Statistics data showed on Wednesday, topping economists&#8217; forecasts of a 0.8% increase.<\/p>\n<p>That lifted the annual pace to 3.4%, the highest in five quarters and well above the RBA&#8217;s target band of 2% to 3%.<\/p>\n<p>&#8220;We think the RBA will conclude that demand is running ahead of supply and that an interest rate adjustment would help ensure inflation returns to the target,&#8221; said Adam Boyton, head of Australian Economics at ANZ.<\/p>\n<p>&#8220;In the wake of an interest rate increase we would anticipate material softening in leading indicators of activity&#8230; we view this as a single &#8216;insurance&#8217; tightening, not the start of a series of rate hikes.&#8221;<\/p>\n<p>For December alone, the headline CPI rose 1% from the previous month, the biggest jump since July as the expiry of government rebates drove electricity prices higher and holiday demand boosted travel and accommodation costs.<\/p>\n<p>The annual pace picked up to 3.8% from 3.4% in November and above forecasts of a 3.6% rise.<\/p>\n<p>Expectations of a hot result had been building in the market, with three-year government bond yields hitting a two-year top of 4.339% immediately after the data. They were last down 1 basis point at 4.257%.<\/p>\n<p>The Australian dollar , which rallied 1.4% overnight to hit a three-year high as the greenback tumbled, was down 0.2% at $0.6997.<\/p>\n<p>&#8216;MORE TO DO&#8217; ON INFLATION<\/p>\n<p>Treasurer Jim Chalmers on Wednesday acknowledged that price pressures are lingering longer than the government would have liked and he would not preempt the decisions taken by the Reserve Bank.<\/p>\n<p>&#8220;Today&#8217;s numbers are a really important reminder that there is always more to do when it comes to tackling the big challenges in our economy,&#8221; he said at a press conference.<\/p>\n<p>The RBA cut interest rates three times last year to 3.6%, but inflation has since reared its head again. Policymakers have warned the entire easing cycle may be over, and the next move in rates could be up, rather than down.<\/p>\n<p>Deputy Governor Andrew Hauser said the central bank does not act on one inflation report and would not necessarily hike if the quarterly trimmed mean came in at 1%, but rather it would take a view about the whole economy.<\/p>\n<p>The recent flow of data, however, has underscored stronger-than-expected economic momentum, with a surprise fall in the unemployment rate suggesting the labour market may have started to tighten again.<\/p>\n<p>Robust consumer spending, record-high housing prices and a recovery in business investment are adding to the case that the economy could be already bumping up against its speed limit.<\/p>\n<p>&#8220;Together with strong labour market data and capacity constraints, the case for tighter monetary policy is clear,&#8221; said Cherelle Murphy, EY chief economist.<\/p>\n<p>&#8220;A higher cash rate, starting with a 25-basis-point increase to take it to 3.85% next week, will be necessary for the Reserve Bank to get inflation back into its 2% to 3% target band.&#8221;<\/p>\n<p data-testid=\"SignOff\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__extra_small__8Buss body-module__full_width__kCIGb body-module__extra_small_body__Bfz20 sign-off-module__text__LQAMP\">Reporting by Stella Qiu and Wayne Cole; Editing by Jacqueline Wong and Shri Navaratnam<\/p>\n<p data-testid=\"Body\" dir=\"ltr\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf article-body-module__element__5eCce article-body-module__trust-badge__5mS3f\">Our Standards: <a data-testid=\"Link\" target=\"_blank\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.thomsonreuters.com\/en\/about-us\/trust-principles.html\" rel=\"noopener nofollow\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__medium__2Rl30 text-module__small__sph8i link-module__link__INqxZ link-module__underline_default__-okuC link-module__with-icon__qlg76\">The Thomson Reuters Trust Principles., opens new tab<\/a><\/p>\n<p><a href=\"https:\/\/www.reutersagency.com\/en\/licensereuterscontent\/?utm_medium=rcom-article-media&amp;utm_campaign=rcom-rcp-lead\" target=\"_blank\" dir=\"ltr\" class=\"button-module__link__A3sD0 button-module__secondary__70gBu button-module__round__QDFgq button-module__w_auto__Sem-F\" data-testid=\"LicenceContentButton\" rel=\"nofollow noopener\">Purchase Licensing Rights<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Core Q4 inflation rises to uncomfortable level, puts RBA on high alert Headline inflation also accelerates in December,&hellip;\n","protected":false},"author":2,"featured_media":307517,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[174],"tags":[2786,82708,82709,79,84370,84897,82543,82538,88440,82546,83395,82556,82549,82541,84149,82550,83396,84041,83397,83391,83393,84146,82547,84461,82557,82540,83394,82548,82551,83115,83116,179,84148,18,87582,19,84365,84368,17,83122,83123,82565,82507,85212,1659,86741,82534,82533],"class_list":{"0":"post-307516","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-asia","9":"tag-au","10":"tag-aunz","11":"tag-business","12":"tag-cen","13":"tag-dbt","14":"tag-destabn","15":"tag-destabx","16":"tag-destauf","17":"tag-destbnx","18":"tag-destc","19":"tag-destd","20":"tag-destdnp","21":"tag-deste","22":"tag-destef-markets-macromatters","23":"tag-destfun","24":"tag-destgro","25":"tag-destm","26":"tag-destmtl","27":"tag-desto","28":"tag-destoil","29":"tag-destortao","30":"tag-destpsc","31":"tag-destptd","32":"tag-destrbn","33":"tag-destrnp","34":"tag-destsof","35":"tag-destu","36":"tag-destucdptest","37":"tag-eci","38":"tag-eco","39":"tag-economy","40":"tag-efmarkets-macromatters","41":"tag-eire","42":"tag-frx","43":"tag-ie","44":"tag-infl","45":"tag-int","46":"tag-ireland","47":"tag-mce","48":"tag-mplt","49":"tag-mtpix","50":"tag-news1","51":"tag-plcy","52":"tag-rba","53":"tag-rulesworld-australia","54":"tag-topcmb","55":"tag-topnws"},"share_on_mastodon":{"url":"","error":"Validation failed: Text character limit of 500 exceeded"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/307516","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=307516"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/307516\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/307517"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=307516"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=307516"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=307516"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}