Inflation Eases Again – Could an Interest Rate Cut Be on the Horizon?
Australia’s fight against inflation is showing promising signs, with the latest data from the Australian Bureau of Statistics revealing a continued easing in price pressures. These figures were recorded before the recent tariff announcements by the USA, which could introduce new complexities to the global economic landscape. Nonetheless, the downward trend in inflation adds weight to the possibility of an interest rate cut in the near future.
In February, the annual headline inflation rate fell to 2.4%, down from 2.5% in January. This marks the seventh consecutive month inflation has remained within the Reserve Bank of Australia’s (RBA) target range of 2–3%—a positive signal that the RBA’s monetary tightening is having its intended effect.
More significantly, the trimmed mean inflation rate—a key measure closely watched by the RBA due to its exclusion of volatile items—also eased, dropping from 2.8% to 2.7%. This is the third straight month this core measure has sat within the target band, reinforcing the view that inflation is steadily being brought under control.
For the past three years, the RBA has maintained relatively high interest rates to dampen consumer spending and cool inflation. With inflation now appearing to stabilise, the central bank may begin to shift its focus. Market watchers are eyeing the upcoming May monetary policy meeting, where the RBA may consider lowering the official cash rate—a move that could lead lenders to reduce mortgage interest rates and potentially provide some relief to borrowers.
However, it’s not all smooth sailing. The recent tariff tensions introduced by the US may inject fresh uncertainty into the global economy. If the RBA sees this as a potential risk to economic stability, it may decide to proceed cautiously and hold rates steady to assess the broader impact.
What to Do Next
With inflation easing and the Reserve Bank of Australia potentially considering interest rate cuts, now is a good time to:
- Review Your Finances – Check your current home loan rate and compare it with what’s available in the market. If a rate cut is announced, lenders may follow—so it pays to be prepared.
- Get Pre-Approval Updated – If you’re thinking about buying, having an up-to-date loan pre-approval puts you in a strong position. A potential rate drop could improve your borrowing power.
- Reassess Investment Opportunities – Lower interest rates often renew buyer confidence and drive property market activity. It may be a good time to explore high-growth suburbs or off-the-plan opportunities.
- Stay Informed – The property and lending landscape can shift quickly. Keep an eye on RBA announcements, global developments, and lending trends—or partner with a property adviser who does this for you.
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While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us. We welcome the opportunity to assist you.
April 2025
