Economists are now more optimistic about the prospects of a February rate cut due to several factors in yesterday’s CPI release according to CreditorWatch’s Chief Economist, Ivan Colhoun: slower food and insurance inflation and a slight slowdown in rent increases.

However, he notes:

“Recent very low unemployment data and today’s increase in job vacancies certainly complicate the February decision as they suggest the labour market remains considerably tighter than pre-COVID times. However, to me, the Board has shown a preference for the maintenance of low unemployment over lowering inflation in recent times, so a first rate reduction in February remains a reasonable possibility depending on the Q4 CPI outcome and December unemployment and November retail sales data.”

This graph helpfully depicts the trend in core inflation as it compares to RBA forecasts – which Mr Colhoun says is good news as far as prospects for monetary policy easing goes:

More now on the impact of yesterday’s inflation data on interest rate cuts.

As David Taylor reports, while the prospect of a February rate cut has risen, it’s not a done deal yet and depends on unemployment data and quarterly inflation data later this month.

Embattled casino operator Star Entertainment is worth keeping an eye on this morning when the market opens, after it released an update on its cash position.

The company has warned it only has $79 million left in cash, which is a reduction of $70 million from the previously reported balance 3 months prior of $149 million.

It is now trying to find a way to meet conditions to draw down $100 million from a debt facility but admits that “conditions remain challenging to meet given the Group’s current circumstances”.

It’s 2025 but slavery is sadly not a thing of the past. Over the past few years there has been increasing focus and pressure on multinational business to stamp out modern slavery and dodgy practices in their global supply chains. But slavery persists — even in our own backyard.

Read this compelling account of slavery in the 1980s in Australia by Fijian worker Moe Turaga:

Inflation isn’t just at the forefront of investors’ minds here in Australia, after yesterday’s data (more analysis on that shortly, as promised), it’s also causing some concern in the US, with Tuesday’s stronger-than-expected economic data lowering expectations of Fed rate cuts.

Today, minutes from the December meeting of the US Federal Reserve (via Reuters) reveal officials see an increasing risk that inflation could remain sticky due to the policies of incoming President Donald Trump. They noted the uncertainty around the policies further clouded the economic outlook.

Here’s a quote from the minutes:

“Participants expected that inflation would continue to move toward 2%, although they noted that recent higher-than-expected readings on inflation, and the effects of potential changes in trade and immigration policy, suggested that the process could take longer than previously anticipated”

After the release of the minutes, interest rate futures markets continued to reflect bets that the Fed would keep its policy rate steady in the current 4.25%-4.50% range at its next couple of meetings, with the first reduction coming in May at the earliest, and the odds of a second cut in 2025 only at 50%.

Can you cut back on your health insurance, rent or haircuts?

Probably not, which is one of the reasons inflation is proving sticky, as the areas with some of the biggest price increases are things that are close to essential (unless you favour a bowl cut by your mum in the back yard)

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Watch David Chau’s Finance Report for more:

Good morning and welcome to today’s live markets and business blog. I’ll be with you this morning to guide you through the day’s next. Right now, investors are waking up and digesting yesterday’s interest rate data (catch up here) and what it might mean for a rate cut (we’ll bring you more on that shortly).

Futures indicate the Australian share market will open lower later this morning.

US markets are fairly mixed at the moment – the Dow Jones and S+P 500 are flat, while the tech-heavy Nasdaq is 0.1% lower.

The Australian dollar is lower, worth just over 62 US cents.

And Bitcoin is back down too after recently surpassing US$100,000 again. It’s at US$94,264

Not too many events on the cards today — but we do have November retail sales out at 11.30am which we will of course bring you live