The S&P/ASX 200 Index (ASX: XJO) jumped 0.2% shortly after the clock struck 11:30am AEDT, putting the benchmark index up 0.9% for the day.
The tailwinds came as investors reacted positively to the latest Aussie inflation data from the Australian Bureau of Statistics (ABS). That was released at, you guessed it, 11:30am AEDT.
Here's what we know.
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ASX 200 investors eye slowing inflation
The ASX 200 enjoyed a boost after the ABS revealed that the monthly Consumer Price Index (CPI) indicator rose 2.4% in the 12 months to February 2025. That's 0.1% lower than last month's print.
"Annual CPI inflation was slightly lower in February, after holding steady at 2.5% for the previous two months," Michelle Marquardt, ABS head of prices statistics, said.
That's pretty much in line with consensus forecasts, with National Australia Bank Ltd (ASX: NAB) economists among those who'd expected a modest retrace in inflation to 2.4%.
The largest contributors to rising prices were food and non-alcoholic beverages (up 3.1%), alcohol and tobacco (up 6.7%), and housing (up 1.8%).
Also likely encouraging ASX 200 investors today, underlying inflation, the RBA's preferred gauge which takes out certain volatile items, also pulled back some.
According to Marquardt:
Annual trimmed mean inflation was 2.7% in February 2025. This was down slightly from the 2.8% inflation in January and has remained relatively stable for three months.
The CPI excluding volatile items and holiday travel measure rose 2.7% in the 12 months to February, compared to a 2.9% rise in the 12 months to January.
What does this mean for interest rates?
ASX 200 investors and mortgage holders alike are, broadly, hoping to see the Reserve Bank of Australia cut the official interest rate several times this year.
The RBA meets next week, 1 April, for its next interest rate decision. The central bank's target range is for inflation to track between 2% and 3%.
Commenting on today's inflation data and the potential impact on the RBA interest rate decision, Josh Gilbert, market analyst at eToro, said, "The expectation for a May rate cut grew today as both trimmed and headline inflation came in below forecasts, helping to extend the local market gains today."
Gilbert added:
There's unlikely enough in today's release to force the RBA's hand to cut next month, but it does set the stage for a May rate cut. The focal point will now shift to Q1 CPI data at the end of April, which we expect to show the continued trend of easing price pressures, giving the RBA the freedom to lower rates.
Ben Thompson, CEO of Employment Hero, sounded a more optimistic note on the inflation numbers and the odds that ASX 200 investors could see an interest rate cut next week.
"Today's drop in monthly CPI to 2.4% is a positive sign that the Australian economy is heading in the right direction and could help the RBA lean towards a rate cut on April 1," Thompson said.
Stay tuned!
