Inflation trends drive interest rate concerns in Australia and Eurozone

In Australia, July's trimmed mean inflation rose to 3.6% annually, exceeding economist expectations of 3.5%. This persistent price pressure has led markets to price in a 95% probability of a further interest rate hike by the Reserve Bank of Australia (RBA) by December, up from 67% prior to the data release. The RBA is currently working to return inflation to its 2%-3% target range.

In the Eurozone, European Central Bank (ECB) data for July shows mixed consumer expectations. While median inflation expectations for the next 12 months and three years have decreased slightly, perceptions of inflation in Greece remain significantly higher than the Eurozone average, with perceived inflation in Greece at 10% compared to the 3% regional average. However, expectations for economic growth over the next 12 months have become less negative.