Yesterday, mortgage holders and ASX share investors received a mixed message on Australia’s inflation rate.

On the positive side of the scale, the ABS reported that the Consumer Price Index (CPI) increased by 4.0% in the 12 months to May. That’s down from the 4.2% increase in the inflation rate for the 12 months to April.

On the negative side of that scale, the ABS revealed that trimmed mean inflation, which takes out certain volatile items (like fuel), increased to 3.6%. That’s up from 3.4% in the 12 months to April and well above the RBA’s 2% to 3% target range.

That’s important for ASX share investors and mortgage holders hoping for interest rate relief, as the trimmed mean number is the RBA’s preferred gauge.

As you’re likely aware, Aussies have already had to contend with three interest rate increases from the central bank in 2026. While the RBA kept rates on hold at 4.35% at its last meeting on 16 June, this still sees the official interest rate back at their 2024 peak, and matching the highest level since 2011.

So, what can we expect from interest rates now?

What the experts are saying on the inflation rate and the RBA

Commenting on the latest inflation rate numbers, Ebury economist Anthony Malouf said, “May CPI data was weaker than expected at the headline level… However, the headline figure is heavily distorted by the ongoing unwind of automotive fuel prices, which have fallen over the past two months.”

As for what this might mean for Australia’s interest rates, Malouf said:

More concerning for the RBA, trimmed mean inflation surprised to the upside, rising 0.4% MoM with the annual rate lifting to 3.6% from 3.4% in April, suggesting underlying inflation continues to firm…

We maintain our view that the cash rate remains on hold at 4.35% through 2026 and into 2027.

CreditorWatch chief economist Ivan Colhoun has a more hawkish view on what we might expect from the RBA’s rate-setting path.

According to Colhoun:

There was some good news in today’s CPI release with the first reports of some price falls as fuel surcharges were reduced…

However, that still leaves Australia with a labour market inflation problem, with the recent 4.75% national wage case decision likely to sustain price rises at rates nowhere near consistent with the RBA’s 2.5% aims. That suggests the Bank isn’t finished tightening as yet.

Connecting the dots, Colhoun advised mortgage holders and ASX investors to brace for another rate hike towards the end of the year.

He concluded:

My base case remains of a continuing slow, elongated tightening cycle in Australia, underpinned by the global AI, defence and renewables investment boom, with mining also benefiting. Further tightening remains a significant risk. My expectation is the RBA will continue to observe inflation and the economy for a while longer and next tighten in November.

And we’ll leave off with BNY APAC macro strategist, Wee Khoon Chong, who said the latest inflation rate data leaves the door open for another RBA rate hike in 2026.

Chong noted (quoted by the Australian Financial Review):

Markets appear too complacent in assuming the current tightening cycle has peaked. The data is unlikely to shift the RBA from its current wait-and-see stance in the near term.

However, the firmer core inflation reading reinforces our view that further policy tightening remains possible before year end.

Stay tuned!

The post Buying ASX shares or paying off a mortgage? Here’s what the inflation rate means for RBA interest rate hikes appeared first on The Motley Fool Australia.

More reading

• Downgrade alert! 4 ASX shares re-rated by experts this week
• Morgans says these ASX shares could rise 5%, 20%, and 55%
• Lendlease shares jump 6% after $525 million deal. Is the worst over?
• Buy, hold, sell: Karoon Energy, Brambles, REA shares
• Why Judo Capital, Minerals 260, Santos, and Worley shares are dropping today

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Looking for some investment options? Well, Morgans has just given its verdict on these ASX shares.

Is it bullish or bearish? Let’s see what the broker is saying about them:

Astron Ltd (ASX: ATR)

Morgans is a fan of this mineral sands and rare earths company and has named it as a (speculative) buy with a 90 cents price target. This implies potential upside of 55% for investors from current levels. It commented:

ATR’s flagship Donald Project is shovel-ready and on track for a Phase 1 FID in the Sept-Q 2026, with project financing and HMC offtake the final gating items. A newly released Phase 2 study and JV partner Energy Fuels’ rapid US rare earth processing build-out reinforce the long-term upside of this high-quality, ex-China critical minerals developer. Maintain SPECULATIVE BUY rating with a A$0.90ps target price.

Baby Bunting Group Ltd (ASX: BBN)

The broker thinks a compelling entry point has arrived for investors to accumulate this baby products retailer’s shares. It has a price target of $1.70 on its shares, which implies potential upside of 20% for investors from current levels.

Morgans believes at under 9x earnings, this ASX share looks good value. It said:

BBN reported a weaker than expected trading update, downgrading its pro-forma NPAT by ~11% at the midpoint of guidance. The downgrade was driven by softer sales, particularly in the 4Q, and increased supply chain costs. Our price target lowers to $1.70 (from $1.79), and we maintain our ACCUMULATE rating. Despite a softer consumer environment, we see the strength of the refurbished store program likely to underpin earnings growth in FY27. Trading at <9x PE, we see the current price as a compelling entry point to accumulate.

Tasmea Ltd (ASX: TEA)

Morgans has downgraded this specialist maintenance services provider’s shares to an accumulate rating with a $9.80 price target (offering 5% upside). It made the move after the ASX share recorded very strong gains over the past month. The broker adds:

Hot-on-the-heels of the Maxim acquisition announced earlier this month, TEA has entered into an agreement to acquire JPS Group, a specialist integrated services provider to [the] energy sector, for $50m upfront (5x FY26 EBIT) or up to $75 million inclusive of all earn-outs (7.5x FY26 EBIT or just 6.2x $12m maintainable EBIT).

This adds scale and an important growth lever to the underperforming Mechanical division, with JPS expected to double revenue by FY29. For the base business, FY26 guidance of $117m EBIT and $72.5m NPAT has been reiterated. We increase our EPS forecasts by +5-6% in FY27 and FY28. Our target price rises in line with our earnings forecasts to $9.80 (from $9.15).

The post Morgans says these ASX shares could rise 5%, 20%, and 55% appeared first on The Motley Fool Australia.

More reading

• This company’s shares have more than tripled. It’s now predicting 70% earnings growth
• A $75 million deal has this ASX 200 stock smashing a record high today
• Why is this ASX retail stock falling 8.5% today?
• 3 ASX small-cap shares to buy: Morgans
• This special dividend could deliver a windfall gain, and it’s not too late to buy in

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Lendlease Group (ASX: LLC) shares are in demand on Thursday after the ASX-listed property group announced another major divestment.

At the time of writing, the Lendlease share price is up 5.84% to $3.08.

That adds to a better recent run for the ASX real estate stock, which has now climbed almost 10% over the past month.

However, shareholders are still sitting on some heavy losses in 2026. Lendlease shares remain down about 40% since the start of the year, showing just how much pressure the stock has been under.

Here’s what the company told the market today.

Lendlease sells Keyton stake

According to the release, Lendlease is selling its remaining interest in the Keyton Retirement Living Trust.

Current co-investor Aware Super will acquire Lendlease’s 25.1% interest for $525 million, with the net proceeds to be used to reduce group debt.

The deal is in line with the company’s half-year 2026 book value and remains subject to conditions, including regulatory approvals.

Lendlease is targeting completion in the first half of FY27.

Keyton is a retirement living business, and the sale adds another piece to Lendlease’s plan to simplify the group and recycle capital out of its non-core assets.

That has been a major focus for Lendlease as it works through its turnaround. Over the past year, sentiment has been weighed down by debt concerns, asset sales, and earnings pressure.

More capital recycling

The latest deal adds to a growing list of moves from Lendlease’s Capital Release Unit (CRU).

The company said it has now announced or completed more than $3.4 billion of capital recycling transactions since its May 2024 strategy update.

That includes asset sales across Australian communities, US military housing, international land and inventory, retail and office interests, and other holdings.

Management said the “focus remains on balancing value realisation with speed of execution.”

Can the recovery continue?

Today’s gain is a welcome change for Lendlease shareholders, but it doesn’t erase what has been a brutal year.

The stock is still down around 40% since the start of 2026, so the market is unlikely to get carried away on one deal.

The $525 million Keyton sale gives Lendlease more cash to reduce debt and keeps its capital recycling plan moving.

But there’s still a lot of work to do. The company needs to keep completing asset sales, bring debt down further, and avoid selling assets too cheaply.

Until that happens, the Lendlease share price could move sideways from here.

The post Lendlease shares jump 6% after $525 million deal. Is the worst over? appeared first on The Motley Fool Australia.

More reading

• Why A2 Milk, EchoIQ, Lendlease, and Qantas shares are racing higher today
• Lendlease offloads Keyton stake in $525m deal
• Lendlease Group shares paused pending further announcement
• 3 ASX 200 stocks leaping higher this week on big announcements
• ASX 200 slips as oil shock puts investors on edge

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.