The nations borrowers were praying for a good inflation number yesterday. They got it, so there should be no excuses for the RBA to deny a rate cut on August 12.

At a time when the US central bank boss Jerome Powell has put his head on the Trump chopping block by denying Americans an interest rate cut, our RBA Governor has to be under a lot less pressure to do what her Washington counterpart has refused to do.

And the US President isn’t happy as he has been denied five times this year by the Fed and matters have been made worse by Powell saying if it wasn’t for the Trump tariffs there would’ve been rate cuts.

Luckily for Michele Bullock, the only notable significant critic of the RBA is former Prime Minister Paul Keating, who, to be fair, hasn’t railed against the current governor of our central bank. However, her predecessors have been accused of being historically “late to the party” when it comes to well-timed rate cuts.

However, if our Governor holds back on an August 12 cut to the cash rate from 3.85% to 3.6%, the country’s gracious and respectful approach towards Bullock could become a little more aggressive.

Why?

Well, apart from 32 out of 36 economists being surprised that the RBA board thought they weren’t all that smart in tipping a rate cut in July, there are a lot of small businesses and home loan borrowers who’ll be hopping mad if the Bullock board holds out on a rate cut again.

And that’s especially so, given what yesterday’s Consumer Price Index showed us. In case you missed it, here are the big takeaways:

1. The monthly headline inflation for year to June 30 was 1.9%.
2. The monthly trimmed mean inflation for the past 12 months fell from 2.4% to 2.1%.
3. The more respected quarterly numbers showed the headline rate for the three months to June was 0.7%.
4. That took the annual quarterly headline rate down to 2.1%, compares to 2.4% in the year to March.
5. The annual quarterly trimmed mean inflation rate, which is the most important to this board, fell from 2.9% in March to 2.7%, which is the lowest since December 2021, when we were out of Covid lockdowns.

What I found interesting is that goods inflation was up 1.1% for the year to June but services inflation was up 3.3%, showing that consumers are putting off buying products, so product price increases are less prevalent, while services businesses are in a stronger position to raise prices.

Looking to the economists who trawl through these economic data drops, Westpac’s Chief Economist Luci Ellis says the door is now open for a rate cut at the August meeting as “inflation is within target. The RBA likely to continue reducing monetary restrictiveness, including by cutting the cash rate at its August meeting”.

From one bank’s view to another, this is what the CBA’s Harry Ottley took out from the CPI numbers: “Commonwealth Bank (CBA) Group economists have retained our view that the RBA will resume its rate cutting cycle next month, with 25 basis point reductions in the cash rate target at the August and November 2025 meetings taking the cash rate target to 3.35% by year-end. While the annual core CPI growth rate of 2.7% is slightly above the RBA’s May forecast of 2.6%, we don’t see this as a barrier for an August rate cut, given the softer June labour market data, and supportive trends across services, housing and tradeable inflation”.

Personally, I would have preferred the trimmed mean at 2.5% rather than 2.7%, so the RBA would’ve had no excuses to welch on a rate cut next month, but if these guys at Martin Place refuse to cut again, then the mudslinging at the too cautious central bank mob might be too hard to hold back.