Australian Bond Exchange Weekly Update
28th March 2025
Key Points
- Australia: The Reserve Bank of Australia (RBA) reduced its cash rate by 25 basis points to 4.10% per annum. February’s annual inflation rate stands at 2.4%, with the trimmed mean at 2.7%.
- United States: The Federal Reserve’s cash rate remains between 4.25% – 4.50% per annum. February’s inflation data is anticipated to show a 0.3% monthly increase and a steady 2.5% annual rise, with core inflation expected to uptick to 2.7%.
- United Kingdom: The Bank of England holds its Bank Rate at 4.50%. February’s inflation rate decreased to 2.8%, down from 3.0% in January.
- Eurozone: The European Central Bank’s (ECB) deposit facility rate remains at 2.50% per annum. February’s annual inflation rate eased to 2.3%, down from 2.5% in January.
Global Cash Rates & Inflation
- Australian inflation slows, but rising energy costs may reverse the trend.
- US consumer confidence drops to a four-year low amid economic uncertainty.
- Fitch cuts global growth forecasts, warning of slower expansion in major economies.
- UK inflation eases to 2.8%, but core inflation remains elevated at 3.5%.
Australian Inflation Continues to Cool
Trimmed mean inflation, the RBA’s preferred measure of underlying inflation, fell from 2.8% in January to 2.7% in February, according to the Australian Bureau of Statistics. Headline inflation remained at 2.4% last month. Encouragingly, inflation in the housing market appears to be easing after several years of rapid price increases.
The RBA has previously indicated expectations of a gradual rise in unemployment to 4.2% by mid-2025, aligning with broader projections of a cooling labour market. Wage growth and inflation remain key considerations for future monetary policy decisions.
US Consumer Confidence Fell to a Four-Year Low
The Conference Board’s consumer confidence index declined by 7.2 points to 92.9 this month, marking the lowest level since January 2021. This decline reflects growing concerns about trade policies and tariffs, as noted in survey responses. Additionally, economic and policy uncertainty has been cited more frequently.
Fitch Ratings Cuts Global Growth Outlook
Fitch Ratings revised its US 2025 growth forecast down to 1.7% from 2.1% in its December 2024 Global Economic Outlook (GEO). The 2026 forecast has also been lowered to 1.5% from 1.7%, well below the trend and a significant drop from the nearly 3% annual growth recorded in 2023 and 2024.
Fiscal easing in China and Germany may offset some of the impact of higher US import tariffs. However, eurozone growth is expected to be weaker than previously forecasted. Fitch also warned that Mexico and Canada, given their trade exposure to the US, are likely to experience technical recessions, leading to downward revisions in their 2025 growth forecasts by 1.1 and 0.7 percentage points, respectively.
UK Inflation Cools to 2.8% in February
The UK’s inflation rate edged down to 2.8% in February, slightly below analyst expectations of 2.9%, according to the Office for National Statistics. Core inflation, which excludes volatile items such as energy, food, alcohol, and tobacco, eased to 3.5% from 3.7% in January.
This data will be closely monitored by the British government as Finance Minister Rachel Reeves prepares to update lawmakers on her spending and taxation plans, as well as the broader economic outlook.
*Data accurate as at 28.03.2025
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