Higher Australian Inflation Confirmed, New Zealand Cuts Rates as Expected

Higher Australian Inflation, All as Forecast in New Zealand – Commerzbank

Australian inflation for April came in slightly higher than expected at 2.4%, but still comfortably within the Reserve Bank of Australia’s target range of 2–3%. Despite the modest uptick, the market reaction was muted, as investors await further economic data, including first-quarter growth figures, upcoming labor market reports, and May inflation statistics. These will help determine the central bank’s next move, expected in early July.

Meanwhile, the Reserve Bank of New Zealand (RBNZ) followed expectations by cutting interest rates by 25 basis points. The RBNZ cited inflation within the target range and gradual improvement in the real economy despite ongoing global uncertainties. The central bank also slightly trimmed its outlook for key interest rates, signaling the likelihood of further cuts in the near term.

However, the RBNZ appears close to reaching its terminal rate. One policymaker voted to keep rates unchanged, reflecting a cautious stance. The central bank’s chief economist noted that the key interest rate has entered its neutral zone, suggesting that the current sequence of rate cuts may soon come to an end.

Overall, the Australian dollar showed little reaction to the inflation data, while the New Zealand dollar responded positively to the rate cut and the bank’s outlook.