The Australia 200 trades 31 points (0.34%) lower at 9024 at 2.35pm AEDT.
Wall Street rally fails to uplift ASX 200
The Australia 200 (ASX 200) has shrugged off a robust Wall Street rally, erasing nearly all of yesterday’s hard-fought 36-point gain, as stock-specific shocks and hawkish commentary from Reserve Bank of Australia (RBA) Governor Michele Bullock weighed heavily on sentiment.
Inflation report raises stakes for RBA decision
Speaking overnight in London, Governor Bullock described the labour market as ‘still a little tight’ and cautioned against overreacting to a single data point, specifically the recent uptick in the unemployment rate to 4.1%.
On tomorrow’s third quarter (Q3) 2025 consumer price index (CPI) release, Bullock warned that a trimmed mean reading of 0.9% quarter-on-quarter (QoQ) would represent a ‘material miss’ against the RBA’s August forecast of 0.6% QoQ. This effectively raises the bar for a rate cut next week, with a print of 0.9% or higher likely seeing the RBA keep rates on hold, pending the release of the October labour force report on 13 November.
The dilemma of waiting for the October labour force report is that it might show unemployment rising from 4.5%, increasing the chance of a policy error, specifically around the labour market.
Due to this non-negligible risk, and regardless of whether tomorrow’s inflation report shows inflation materially above the RBA’s forecast, we believe the RBA should cut rates by 25 basis points (bp) in November. This approach would follow the path of least regret, as the Federal Reserve (Fed) did last month.
