Australian shares surged to a record high on Friday, fueled by investor optimism over potential interest rate cuts next month following weaker-than-expected inflation data.
The S&P/ASX 200 index climbed 0.4% to 8,524.60 points as of 02:32 GMT, after hitting a new peak of 8,566.90 points earlier in the session. The index was on track for its strongest weekly gain since December.
Market sentiment turned bullish after Australia’s trimmed mean inflation—the Reserve Bank of Australia’s (RBA) preferred measure—fell to 3.2% in Q4 2024, below the forecasted 3.4%. This unexpected decline strengthened expectations that the RBA could cut interest rates as early as February 18 to ease mortgage pressures.
Analysts at ANZ (ASX:ANZ) and Westpac (ASX:WBC) predict a rate cut next month, with Westpac forecasting further reductions in May, August, and November, bringing the cash rate to 3.35% by year-end. However, both banks emphasized that RBA’s decisions remain data-dependent.
Gains were broad-based, with most sectors rallying. The ASX 300 Metals & Mining index jumped over 1%, led by Rio Tinto (ASX:RIO) and BHP Group (ASX:BHP). The All Ordinaries Gold index rose 2.6% on firmer gold prices, while the ASX 200 Energy index gained alongside higher oil prices.
However, financial stocks remained subdued as lower interest rate expectations pressured the sector. Despite the strong market response, analysts caution that the RBA may take a cautious approach, ensuring inflation remains within the 2-3% target range before committing to further cuts.


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