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Inflation slows down in Q4 to 0.6pc; under forecast

Sarah Jones\
The number: The consumer price index slowed to 0.6 per cent in the three months through December from a 1.2 per cent in the September quarter, according to the Australian Bureau of Statistics. Market consensus was to slow to 0.8 per cent. Over 12 months, CPI cooled to 4.1 per cent from 5.4 per cent.
Why it matters: This is the last key piece of economic data that will inform the Reserve Bank’s decision on monetary policy when it meets next week. A few economists still predict the RBA will hike once more this cycle to tame sticky services inflation.
What has changed: Traders globally have been tapering rate cut bets, particularly in the US. In Australia, there is almost zero expectation of a rate increase next week, but markets are fully priced for a rate cut in the second half of the year.

What next: The US Federal Reserve announces its decision on monetary policy later on Wednesday (Thursday AEDT) which may influence the RBA when it reconvenes on February 5- 6 after an extended summer break. Australia’s central bank last raised rates in November.