Investors breathed a sigh of relief after Australia’s core inflation measure came in below expectations, prompting traders to rapidly abandon bets of an interest rate increase from the Reserve Bank of Australia next week.

The sharemarket had its best day since 2022, the Australian dollar fell, and bonds yields tumbled as money markets wrote off the chance of a move higher from the RBA at its August board meeting and even priced in a 4 per cent chance of a rate cut.