Inflation slowdown to complicate RBA interest rates outlook

Aussie homeowners have dodged a financial bullet – at least for now – after fresh data revealed another reduction in inflation over July, which may halt a Reserve Bank that had been reaching for the trigger on another rate hike. The inflation change was modest, with the ABS reporting headline CPI changed from 3.8 per cent in June to 3.5 per cent over July, but the trend could give the RBA reason to be cautious with a rate hike next month. However, the longer-term outlook could still be negative for mortgage holders, with trimmed mean inflation unchanged at 3.6 per cent. Economists said this could be a sign of entrenched inflation and rate hikes at the end of the year could be on the cards. The Reserve Bank target band for inflation is 2-3 per cent MORE: Aus’ hidden mortgage default hotspots revealed RBA governor Michele Bullock announced earlier this month that the door remained open to rate hikes. Picture: Nikki Short “The fall in headline inflation from 3.8 to 3.5 per cent looks encouraging, but the detail is less reassuring,” said Ray White economist Nerida Conisbee. “For mortgage holders, this means rate cuts remain a long way off and the risk of another increase is still very ...