Australia is set to release its third-quarter Consumer Price Index (CPI) data at 11:30 am, stirring anticipation among economists and strategists. The report is expected to influence the Reserve Bank of Australia’s (RBA) upcoming policy decisions, particularly regarding potential interest rate adjustments. Market analysts are closely watching the data to gauge whether the central bank will maintain its current stance or consider further monetary easing.
TD Securities anticipates the Q3 inflation to exceed the RBA’s August Statement on Monetary Policy forecasts, projecting a headline CPI of 2.9 per cent year-over-year and a trimmed mean of 2.7 per cent. They attribute the expected acceleration in headline CPI to rebounding housing prices and rents, coupled with a sharp rise in electricity costs. RBC Capital Markets suggests that the RBA’s recent communications indicate inflation may be running slightly higher than their forecasts, placing emphasis on underlying CPI figures to inform a potential November rate cut.
eToro analyst Farhan Badami tempers expectations, citing persistent inflation and low consumer confidence. Badami notes that hopes for rate cuts before the end of the year have diminished, with focus shifting towards quarterly CPI readings that heavily influence RBA decisions. He expects inflation to remain sticky, suggesting that any reading higher than steady will likely halt any further policy easing this year.
The RBA is Australia’s central bank responsible for maintaining price stability and full employment through monetary policy. They aim to keep inflation between 2-3 per cent, influencing economic activity by adjusting the cash rate.
