On Wednesday, the Australian Bureau of Statistics (ABS) will release the September quarter CPI inflation, which will determine whether the Reserve Bank of Australia (RBA) will hike interest rates on Melbourne Cup Day.
CBA expects headline CPI to print at 0.9%/qtr and 5.1%/yr. Trimmed mean inflation is expect to lift by 1.0%/qtr and 4.9%/yr (forecast below).
These numbers are broadly similar to the RBA’s implied profile in the August Statement on Monetary Policy. And CBA believes a set of numbers in line with its forecasts are consistent with monetary policy remaining on hold in November.
Warren Hogan from Judo Bank believes that a quarterly CPI inflation read of 1.0% or above (headline and trimmed mean) will prompt the RBA to hike on Cup Day, whereas a reading below will likely keep it on hold:
The latest Monetary Policy Minutes contained a new line, which was hawkish: “the Board has a low tolerance for a slower return of inflation to target than currently expected”.
This suggests the RBA has its finger on the interest rate trigger and only needs Wednesday’s CPI print to come in a little bit hot to hike.
