
Australian CPI Data Supports RBA’s Cautious Approach on Rate Cuts
Australian dollar edges higher and ASX 200 holds firm as hotter CPI data reinforces the RBA’s cautious stance on rate cuts.
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The Reserve Bank of Australia (RBA) may be vindicated in taking a cautious approach to rate cuts, judging by the latest inflation figures. Headline CPI came in above expectations, and while part of the increase reflects the delay of government electricity rebates, inflation pressures are also evident elsewhere.
Housing costs climbed 3.6% y/y in July, with rents up 3.9%, fuel up 4.7%, and electricity surging 13.1%. The rise in electricity alone is estimated to have added 0.4–0.5 percentage points to headline CPI.
Even the trimmed mean CPI — which excludes the top and bottom 15% of volatile items — rose 2.7% y/y, up from 2.1% in June, marking its largest monthly increase since December 2022.
The RBA were unlikely to cut rates at their next meeting before these figures dropped, and they’re much less likely to now.
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View related analysis:

Chart prepared by Matt Simpson – Data source: Australian Bureau of Statistics (ABS), London Stock Exchange Group (LSEG).
Australian Inflation Surges Across the Board
- Trimmed mean CPI: +2.7% y/y (vs 2.1% prior)
- Weighted mean CPI: +2.8% y/y (vs 1.9% prior)
- CPI ex volatile items & travel (SA): +3.1% y/y (vs 2.5% prior)
- Headline CPI: +2.8% y/y (vs 1.8% prior), +0.9% m/m (vs 0.2% prior)

Chart prepared by Matt Simpson – Data source: Australian Bureau of Statistics (ABS), London Stock Exchange Group (LSEG).
Australian Dollar Slightly Bid After CPI Surprise
Stronger-than-expected CPI data lifted the Australian dollar across the board, though the muted volatility shows traders are really waiting for Friday’s US PCE report. Since the RBA was already unlikely to cut, the data does not shift the policy outlook — and without fresh rate-hike speculation, upside potential for the Aussie remains capped.
AUD/USD briefly teased bulls with a sustained break above 0.65, but momentum has since faded and the pair is now trading slightly lower on the day. AUD/NZD initially pushed above 1.11 before handing back more than half of its earlier gains. I continue to expect AUD/NZD to undergo a pullback on the daily chart before resuming its uptrend beyond 1.11.

Chart analysis by Matt Simpson - Source: LSEG
SPI 200 (ASX 200 Futures) Technical Analysis:
The ASX 200 reached my 9,000 upside target last week, but a retracement has since emerged after a shooting star candle printed on the milestone day. Still, the pullback remains shallow within what is clearly a strong uptrend.
Today’s low is holding above the 20-day EMA, and ASX bulls are attempting to lift price back above the 10-day EMA.
The 15-minute chart shows ASX 200 futures finding support around the overnight VPOC (volume point of control), with a prominent bullish pinbar rebounding from 8,900. Given the strength of this rebound — even with the RBA expected to hold rates higher for longer — dips appear favourable for bulls in the near term.
ASX bulls may look for an intraday swing low around 8,910 as a potential springboard for a move towards the overnight highs near 8,950.

Chart analysis by Matt Simpson - Source: TradingView, ASX SPI 200 Index Futures
-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
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