Mortgage holders are likely to face a longer wait for interest rate relief after the latest inflation data came in above expectations.
Some economists and big banks had predicted the Reserve Bank of Australia (RBA) . Indeed, the Commonwealth Bank and Westpac had forecast a rate cut in September.
There was also an outside chance the RBA could have cut rates when its board met next month, according to ANZ senior economist Catherine Birch, who told the ABC on Wednesday that financial markets had put the likelihood at 7 per cent.
But hopes of a rate cut occurring any sooner than the end of 2024 dimmed on Wednesday when the Australian Bureau of Statistics' (ABS) latest quarterly inflation data .
Annual inflation was tracking in the right direction, falling to 3.6 per cent in the 12 months to March from 4.1 per cent in the year to December.
But quarterly inflation accelerated, clocking in at 1 per cent from 0.6 per cent in the three months to December, the ABS said.
Consensus forecasts had the quarterly rate rising 0.8 per cent in the three months to March for an annual pace of 3.5 per cent.
What the latest inflation data means for interest rates
The RBA started hiking rates in May 2022, in a bid to curb household spending and bring inflation back to its 2 to 3 per cent target band.
It forecasts inflation will fall in this range in 2025.
Rates have been on hold since November, and attention has turned to rate cuts given inflation has been heading in the right direction.
But the RBA has not ruled out further rate hikes and has continued to warn .
Independent economist Chris Richardson said Wednesday's inflation data was "ugly" and "bad news" for those hoping for an interest rate cut.
"Even late 2024 looking a bit hopeful," he wrote on X (formerly Twitter).
Some banks have revised their rate cut forecasts following the latest inflation data. Source: AAP
Oxford Economics Australia's head of macroeconomic forecasting, Sean Langcake, said disinflation was "frustratingly slow".
"The chances of a cut in interest rates coming in 2024 have slimmed based on today's data," Langcake said.
The firmer figures were enough to prompt Westpac to push back its forecast for cuts, from September to November, with Commonwealth Bank economists also leaning towards a later start than their base case of September.
National Australia Bank and ANZ had already forecasted a November start and planned to stick with their predictions.
Financial comparison website Canstar's finance expert, Steve Mickenbecker, said that the latest quarterly inflation increase "puts inflation well above the trajectory" needed to return it to the RBA's target band.
"The 1 percent increase for the March quarter will leave the Reserve Bank concerned that we have fallen off the wagon," Mickenbecker said in a statement.
He added the increase would "not only delay rate cuts probably into 2025 at best but it also puts the potential for interest rate increases back onto the agenda".
With additional reporting by the Australian Associated Press.
