The inflation rate in Australia is currently within its target range, but it's unlikely that rate cuts will occur soon.

• In August, Australia's inflation rate fell from 3.5% in July to 2.7%, meeting the RBA's target range, as announced by the Bureau of Statistics in a Wednesday release.
• Earlier, the RBA stated that it did not anticipate a rate cut for Australia.
• Michelle Bullock, RBA Governor, stated that although the bank anticipates inflation to decrease, potentially within the target range of 2%-3%, this will be due to government relief measures. However, the bank expects inflation to surpass the target range when these reliefs end.

The inflation rate in Australia for August was within the RBA's target range, decreasing from 3.5% in July to 2.7%, as stated in a Wednesday release from the Bureau of Statistics.

Since August 2021, the Reserve Bank of Australia's target range of 2%-3% for the first time has been below the drop.

Earlier, the RBA stated that it did not anticipate a rate cut for Australia.

The U.S. Federal Reserve's decision to cut rates by 50 basis points despite high inflation contradicts Australia's hawkish stance.

RBA Governor Michelle Bullock announced that although the bank anticipates inflation to decrease, it may remain within the target range due to government assistance. However, she stated that inflation is expected to rise above the target range once these reliefs end.

Bullock stated at a press conference that even if the inflation number tomorrow has a two in front of it, meaning it falls back within the band, it does not necessarily mean that inflation is under control or sustainably back within the band.

The RBA stated in its monetary policy statement that "headline inflation is predicted to decrease temporarily due to federal and state cost of living relief. Nevertheless, our current projections indicate that inflation will not return to the target until 2026."

Bullock advised that she desires to observe a "consistent trend down" in inflation, staying within the band.

The upcoming CPI data will be affected by the government cost of living relief measures, according to Sean Langcake, head of macroeconomic forecasting at Oxford Economics Australia.

The RBA will focus on core inflation despite relief programs potentially pushing headline inflation to the top of its target range.

According to Langcake, the subsidies that reduce inflation this year will likely be added back on next year when government payments are reduced, resulting in little change to underlying inflation.

The RBA is not affected by other central banks' rate cuts and predicts that it will maintain steady rates until the second quarter of 2025.

The progress of returning core inflation to the target range has slowed down, and it is challenging to envision a significant improvement in the near future. We believe the bank will require three additional inflation reports before they can confidently initiate an easing cycle.