Price pressures normalise, growth slows

In the US recent CPI data shows that price pressures are normalising and consumer spending remains solid, although labour market conditions point to softer hiring and a more cautious business environment. Markets still expect the first Federal Reserve rate cut around mid-2026.

Global conditions are similarly mixed. Growth among advanced economies is slowing modestly, while emerging markets retain relative momentum despite higher financing costs. A softer US dollar has supported commodity prices and helped stabilise global trade flows following a volatile year of tariff announcements.

In Australia, economic data remains firmer than sentiment suggests. Household spending surprised to the upside for the second consecutive month. However, consumer confidence remains subdued, with many households still adjusting to higher mortgage costs and elevated living expenses. The Reserve Bank of Australia has kept the cash rate at 3.60% with the upcoming CPI release to determine further movements. Broader investment activity—particularly in data infrastructure, energy transition projects, and technology—continues to provide a foundation for medium-term growth.

As we move further into 2026, the most likely path is one of moderate economic expansion and gradually cooling inflation. While risks persist, especially around geopolitics and trade policy, the overall macro backdrop remains stable. We will continue to monitor developments closely and adjust portfolios where appropriate.

Guardian Investments Pty Ltd ABN 18 608 506 261 is a Corporate Authorised Representative of Guardian Associates Pty Ltd AFSL 238281. This page reproduces commentary published in December 2025 and is general advice only. It has not been tailored to your objectives, financial situation or needs, and the figures were current at the time of writing. Past performance is not a reliable guide to future returns. Seek personal financial advice before acting on it.