With just days to go before Australia’s national election, Treasurer Jim Chalmers seized on a significant dip in core inflation to bolster the Labor government’s economic credentials, signaling that markets are right to anticipate further interest rate cuts.

Fresh data from the Australian Bureau of Statistics revealed that the trimmed mean inflation—a key measure preferred by the Reserve Bank of Australia—fell to 2.9% in the March quarter, down from 3.3% and returning to the RBA's target range of 2% to 3% for the first time since late 2021. Meanwhile, headline annual inflation remained steady at 2.4%, and quarterly inflation ticked up 0.9%, slightly above expectations.

Speaking at a press conference, Chalmers said the inflation numbers support the market’s outlook for monetary easing. “Markets are firmly expecting more rate cuts, and there’s nothing in today’s data that challenges that view,” he said. “Bringing core inflation back into the target band is a major milestone.”

Financial markets are now pricing in four to five rate cuts by year-end—equivalent to 117 basis points in total easing—including a 25-basis-point cut as soon as the RBA’s next meeting on May 20. This is a slight pullback from earlier expectations of 123 basis points.

Chalmers struck an optimistic tone ahead of Saturday’s vote, highlighting what he called Labor’s sound economic stewardship. “Inflation is down significantly, real wages are rising, unemployment remains low, public debt is falling, and interest rates are headed lower—all while navigating global uncertainty,” he said.

“This is progress every Australian can be proud of,” Chalmers added, underscoring his party’s pitch to voters focused on stability and economic resilience.