Inflation’s ‘Noise’ Could Delay Rate Cuts Until 2026, ANZ Warns
A seemingly small detail in Wednesday’s inflation data – ‘noise’ in the trimmed mean measure – is sending ripples through the Reserve Bank’s potential easing path. According to ANZ’s latest Australian Macro Weekly, the hurdle for any interest rate cuts this year is now exceptionally high, potentially pushing the first reduction out to early 2026. This isn’t just about numbers; it’s about understanding what’s really happening with inflation and how it impacts your financial future.
Decoding the Trimmed Mean & Why It Matters
The trimmed mean is a key inflation indicator, stripping out the most volatile price changes to give a clearer picture of underlying price pressures. However, ANZ’s analysis suggests recent figures may be artificially inflated by a confluence of one-off factors. Specifically, rises in property rates & charges, tobacco, and electricity prices – all heavily influenced by government policy or external volatility – contributed significantly to the higher-than-expected result. Had these factors been neutral, the trimmed mean could have been 0.14 percentage points lower.
This “noise” is crucial because the Reserve Bank of Australia (RBA) relies heavily on these indicators when setting monetary policy. A falsely high reading could lead to unnecessarily restrictive interest rates, impacting everything from mortgages to business investment. Understanding the nuances of these measures is therefore vital for anyone navigating the current economic landscape.
The Path to Rate Cuts: A Rocky Road Ahead
ANZ currently anticipates a final 25 basis point easing in the first half of 2026. However, this forecast is now facing increased risk. The timing of that cut could slip to May, after the next two quarterly CPI releases, or potentially be scrapped altogether. What’s driving this uncertainty?
Unemployment & GDP: The Key Triggers
ANZ highlights two primary conditions that would need to be met for rate cuts to become a reality this year: a further increase in the unemployment rate (accompanied by unfavorable details within the data) and a weak Q3 GDP result. The recent slight drift upwards in unemployment is a positive sign, but it needs to accelerate to meaningfully influence the RBA’s decision-making. A sluggish economy in the third quarter will be equally critical.
Seasonal Patterns & One-Off Events
Interestingly, ANZ points to a historical tendency for Q3 trimmed mean prints to be higher than those in Q2 and Q4. This seasonal effect, combined with the aforementioned one-off price increases, creates a challenging environment for inflation to cool sufficiently. This isn’t a case of ignoring the data; it’s about recognizing the potential for temporary distortions.
Services Inflation & the RBA’s Focus
The RBA is expected to voice concerns about market sector services inflation in the coming week. While the easing labor market offers some hope for downward pressure on prices, services inflation tends to be stickier than goods inflation. This is because it’s less susceptible to global supply chain disruptions and more driven by domestic factors like wage growth. The RBA provides a detailed explanation of inflation measures on their website.
However, business surveys suggest that broader price and cost pressures are moderating, aligning with the expectation of gradual easing over the next few quarters. This suggests the RBA isn’t likely to drastically alter its course, but will remain cautious.
What Does This Mean for You?
The takeaway is clear: don’t expect rapid relief from high interest rates. The RBA is likely to remain on hold for an extended period, prioritizing price stability over stimulating economic growth. This means borrowers should prepare for continued pressure on household budgets, while savers may continue to benefit from relatively attractive deposit rates. The key is to remain informed and adaptable as the economic picture evolves.
What are your predictions for Australian interest rates over the next year? Share your thoughts in the comments below!


