Australian inflation 20 year high - analysts piling in on a rate hike forecast on May 3

ANZ are now looking for a 15bp rate hile at the May 3 meeting, citing the "higher than expected CPI".

• Inflation pressures have momentum and have broadened.
• A cash rate target of 0.1% is inappropriate against this backdrop.

ING:

• There is also now increasing justification for the first move being more substantial than we first considered likely.
• Taking the cash rate target to 0.5% with a 40bp hike from the current 10bp would seem to make more sense now than a 15bp hike to 0.25%, which bond markets might now view as a derisory response to the inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term surge and the record low unemployment rate.
• The AUD AUD The Australian dollar (AUD) is the official currency of Australia, which is also used in Christmas Island, Cocos (Keeling) Islands, Norfolk Island, as well as independent pacific states.Introduced in 1966, the AUD is currently the fifth most traded currency in the world, behind only the US dollar, euro, Japanese yen, and British pound.The currency is very important to forex markets and is routinely used as a carry trade against other majors.The Reserve Bank of Australia (RBA) is the central bank The Australian dollar (AUD) is the official currency of Australia, which is also used in Christmas Island, Cocos (Keeling) Islands, Norfolk Island, as well as independent pacific states.Introduced in 1966, the AUD is currently the fifth most traded currency in the world, behind only the US dollar, euro, Japanese yen, and British pound.The currency is very important to forex markets and is routinely used as a carry trade against other majors.The Reserve Bank of Australia (RBA) is the central bank Read this Term's recent dip also makes more room for the RBA to hike more aggressively, and arguments for the "front-loading" of policy make as much sense for Australia as they do for the United States.

JP Morgan:

• projecting a 15bps RBA cash rate hike next week
• from 0.1% to 0.25%
• “CPI delivered significant upside through food, housing, and transport,”
• “While occurring in the expected (and not particularly policy-sensitive) areas, there is enough uplift on core inflation to force the RBA to move further ahead of wage data.”

DB:

• We now expect the RBA will hike by 15bps at the May meeting, and follow up with a 50bp hike in June
• it should actively consider a 40bp hike in May, followed by a 25bp hike in June. We cannot rule that scenario out (and neither should the RBA Board), but it is not our base case.
• Australia's inflation dynamics have changed. The Q1 CPI shows the RBA has a (very) narrow window of opportunity to avoid a US- style inflation spiral. Federal election or not, it should act now.

Once again Australia lagging behind NZ.