Australia's Inflation Decline Triggers Rate Cut Expectations

Australian consumer price inflation in the fourth quarter sharply declined to a two-year low, prompting markets to anticipate rate cuts. The consumer price index rose 0.6%, under market forecasts for a 0.8% increase, with the annual pace of CPI inflation slowing to 4.1%. Core inflation also slowed to 4.2%. The Reserve Bank of Australia has raised interest rates by 425 basis points to a 12-year high of 4.35% to control runaway prices, with the door open for further tightening. The overseas landscape has significantly changed, with markets betting on the Federal Reserve and European Central Bank cutting interest rates.