Published by Global Banking & Finance Review®
Posted on April 30, 2025
2 min readLast updated: January 24, 2026
Add as preferred source on GoogleAustralia's core inflation drops to a three-year low, prompting expectations for interest rate cuts. Treasurer Jim Chalmers remains optimistic ahead of the election.
SYDNEY (Reuters) -Australia Treasurer Jim Chalmers said the market was justified to expect more interest rate cuts after annual core inflation slowed to a three-year low, highlighting the decline three days ahead of a closely-contested national election.
The key trimmed mean measure of annual inflation, the Reserve Bank of Australia's preferred gauge, slowed to 2.9% from 3.3%, March quarter data from the Australian Bureau of Statistics showed on Wednesday.
The decline took inflation back into the central bank's 2% to 3% target band for the first time since late 2021. Headline annual inflation held steady at 2.4% and quarterly inflation rose 0.9%, just above forecasts of a 0.8% increase.
"The market has a very firm view that there are more interest rate cuts on the way. And I don't see anything in these numbers that would substantially alter their expectations," Chalmers told a media conference.
"Getting underlying inflation in the target band is a really big deal."
The market now expects four or five rate cuts by the end of the year, or a total easing of 117 basis points, including a quarter-point rate cut at the RBA's next policy meeting on May 20. Prior to the data release, the market had factored in five cuts or 123 basis points of easing.
Chalmers added he was "optimistic" about the state of the economy ahead of a general election on Saturday, with his centre-left Labor party campaigning on its responsible economic management.
He said that "we have got inflation down substantially, real wages up, kept unemployment low, got the debt down, interest rates coming down ... with everything that the world is throwing us."
"I think every Australian can be proud of the progress we've made together."
(Reporting by Christine Chen and Stella Qiu in Sydney; Editing by Jacqueline Wong and Sonali Paul)
The key trimmed mean measure of annual inflation has slowed to 2.9% from 3.3%, marking a three-year low.
The market expects four or five rate cuts by the end of the year, including a quarter-point rate cut at the RBA's next policy meeting.
The decline in inflation has brought it back into the Reserve Bank of Australia's target band of 2% to 3% for the first time since late 2021.
Chalmers expressed optimism about the economy, highlighting achievements such as reduced inflation, increased real wages, and low unemployment.
Chalmers stated that getting underlying inflation within the target band is a significant achievement for the government, especially ahead of the election.
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