Via CBA, their outlook for the Reserve Bank of Australia:
CPI stronger than expected – RBA to hike the cash rate in November
- The headline CPI rose by 1.2%/qtr in Q3 23 and the annual rate dipped to 5.4%.
- The RBA’s preferred measure of underlying inflation, the trimmed mean, increased by a solid 1.2%/qtr and the annual rate stepped down to 5.2 % (from 5.9% in Q2 23) .
- We expect the RBA to act on their hiking bias and raise the cash rate by 25bp at the November Board meeting to 4.35%
More:
- The RBA has a hiking bias. And last night RBA Governor Bullock stated, “the Board will not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation” (our emphasis in bold).
- We are not sure what constitutes a ‘material upward revision’ to the RBA’s inflation forecasts. But we consider the lift in underlying inflation over Q3 23 to be sufficiently strong for the RBA to act on their hiking bias at the upcoming Board meeting.
- The RBA tends to place more weight on underlying rather than headline inflation. And their preferred measure of underlying inflation is the trimmed mean.
Earlier:
- Australian Q3 2023 Headline CPI +1.2% q/q (vs. 1.1% expected)
- Australia - market is rapidly pricing in a November rate hike after surging inflation data
- ANZ forecasts a 25bp RBA interest rate hike on November 7 (previous forecast was December)
From the RBA website currently