Australia\u2019s January financial aggregates showed total credit rising 0.5% month-on-month, down from 0.8% in December, while the year-on-year rate increased to 7.7% from 6.5% a year earlier. Housing and business credit also rose faster over the year, and broad money growth picked up.<\/p>\n
Housing credit increased 0.6% month-on-month and 7.0% year-on-year, compared with 0.7% and 5.6% previously. Business credit grew 0.5% month-on-month, down from 1.0%, while annual growth rose to 9.4% from 8.9%.<\/p>\n
Broad money expanded 0.6% month-on-month, up from 0.5%, and increased 7.4% year-on-year versus 5.2% a year earlier. The data was described as unlikely to change the Reserve Bank of Australia\u2019s current policy view, with AUD\/USD reported modestly firmer.<\/p>\n
Looking back to this time last year, in early 2025, we saw strong credit growth that didn’t meaningfully change the Reserve Bank of Australia’s policy view. Total credit was expanding at 7.7% annually, but the RBA remained on its predetermined path. This created a predictable environment for the Australian dollar.<\/p>\n
The situation today is different, as the focus has shifted from credit growth to slowing inflation. The latest official data showed annual CPI inflation cooled to 3.5% in the last quarter of 2025, a significant drop from the 4.1% we saw in the prior quarter. This is a stark contrast to the persistent price pressures we were monitoring a year ago.<\/p>\n
Consequently, the RBA has softened its tone in its recent February 2026 meeting, dropping its explicit tightening bias for the first time since this hiking cycle began. This pivot suggests the bank is now more likely to hold rates steady or even consider cuts later in the year. This contrasts sharply with early 2025 when the bank was still signaling a hawkish stance.<\/p>\n
For traders, this implies that implied volatility in AUD\/USD options may rise ahead of key data releases, like the next employment or inflation report. A strategy of selling options to collect premium, which may have worked in the more stable environment of early 2025, is now considerably riskier. The market is no longer brushing off data and is highly sensitive to any signs of economic weakness.<\/p>\n
We should also reconsider positions in interest rate futures, which are now pricing in a much higher probability of a rate cut by the end of this year. After the RBA held the cash rate steady at 4.35% for several months, its new data-dependency opens the door for dovish surprises. This is a major shift from early 2025 when the debate was still centered on the timing of further hikes.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" January data: Australia credit growth eased monthly, accelerated annually; housing, business credit and broad money strengthened.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-50415","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t