Inflation figures cool interest rate speculation

The markets probabilities for an interest rate cut have halved from around 72% to 36%. The main driver of this movement has been the Inflation Report for the June quarter, which showed that underlying inflation printed 0.7% for the June quarter compared to "official" forecasts of 0.6% and what we assess as the market's "whisper" forecast of 0.5% (a lower than expected inflation number in New Zealand, which is typically used by markets as a lead indicator for inflation in Australia was behind the optimistic expectations from the market)