Australian shares fall as inflation data dims rate-cut expectations

Published on 09/24/2025 at 02:49 am EDT
(Updates to close)
* Banks hit three-week low
* NAB now sees interest rates on hold until May
* New Zealand names first female central bank governor
(Reuters) - Australian shares fell about 1% on Wednesday after a hotter-than-expected inflation report reduced chances of imminent policy easing, triggering a pullback from equities previously supported by bets of more interest rate cuts on the horizon.
The S&P/ASX 200 benchmark index closed 0.9% lower at 8,764.50, marking its steepest one-day decline in three weeks and erasing nearly all gains made over the last three sessions.
Financials fell 1.8% to their weakest level in three weeks, with the "big four" banks losing between 1.4% and 3.2%.
Banks typically benefit from lower interest rates, which can translate to higher lending volumes for them.
Inflation in August rose at its fastest pace in a year, prompting markets to double down on their bets for a hold next week and trim their wagers of a cut in November.
"The RBA has signalled it will remain highly data-dependent," said Shier Lee LIM, lead FX and macro strategist at Convera in Singapore, adding that markets had already re-priced expectations for near-term easing.
Hebe Chen, a market analyst with Vantage Markets, said an extended pause into November will be a clear bearish sign for equities as the underlying assumptions for current rally that there is "more easing in the pipeline" will be challenged.
Top business lender NAB now sees rates on hold at 3.6% until May next year, compared with earlier expectation of two more cuts in November and February, while top lender CBA said a November cut is not a done deal. Citi now expects a hold in November from a cut earlier.
Market participants now see a near 40% chance of a rate cut in November from the Reserve Bank of Australia (RBA), down from 70% before the data, LSEG data showed.
New Zealand's benchmark S&P/NZX 50 index rose 0.3% to 13,181.31.
Swedish national Anna Breman was named as the country's first female central bank governor amid criticism over the bank's handling of the economy.
 (Reporting by Sneha Kumar in Bengaluru; Editing by Subhranshu Sahu) 

Sumber : Reuters