Australia’s central bank will embark on interest-rate cuts next month, according to a majority of economists polled by Bloomberg, in what would be its first monetary easing in more than four years.

Australia’s quarterly inflation data this week may be key to whether the central bank finally embarks on a monetary easing cycle soon, and in turn, help decide the timing of an election due by May 17.

Australian consumer prices rose at the slowest pace in almost four years in the December quarter, while a pullback in housing costs helped cool core inflation and open the door to a cut in interest rates as early as next month.

A larger than expected drop in inflation data has boosted the chances of an interest rate cut as soon as February.

Inflation in Australia remained in retreat in the last quarter of 2024, stoking the case for the central bank to join the global easing cycle by cutting rates at its coming meeting in February.

Australia’s core inflation eased by more than expected in the final three months of 2024, opening the door to an interest-rate cut as soon as next month and sending the currency lower.

Australia's CPI inflation slows to 2.4% YoY in Q4 2024, driven by government rebates. Click here to find out what investors need to know.