Australia's inflation rate has come within its target range, but rate cuts likely won't come anytime soon

Australia's inflation rate has come within the RBA's target range in the month of August, easing from 3.5% in July to 2.7%., according to a Wednesday release from the country's Bureau of Statistics.

The drop puts the rate below the Reserve Bank of Australia's target range of 2%-3% for the first time since August 2021.

A day earlier, however, the RBA said it did not see that a rate cut was on the horizon for Australia.

Australia's hawkish approach appears at odds with the U.S. Federal Reserve. The Fed last Wednesday had moved to cut rates by 50 basis points despite the latest inflation reading in August at around 2.5%, above the U.S.' central bank's target of 2%.

On Tuesday, RBA Governor Michelle Bullock stated that while the bank expects inflation to fall, possibly within the target band, this would be due to government reliefs, and the bank is expecting that inflation will climb above the target range when these reliefs expire.

"The point I would make is that if tomorrow we get an inflation number with a two in front of it, so it's back in the band, that doesn't mean that we've got inflation under control. It doesn't mean that inflation is sustainably back within the band," Bullock said at a press conference following the RBA's Tuesday decision to hold its benchmark interest rate at 4.35%.

In its monetary policy statement, the RBA said that "headline inflation is expected to fall further temporarily, as a result of federal and state cost of living relief. However, our current forecasts do not see inflation returning sustainably to target until 2026."

Bullock cautioned that she wants to see that inflation is on "a consistent trend down, to the band and it is going to stay in the band."

Sean Langcake, Oxford Economics Australia's