Q3 CPI too high to risk holding, failing to act could harm the RBA's credibility – TDS

Australia Q3 Consumer Price Index (CPI) printed well above the RBA's and consensus forecast. Subsequently, economists at TD Securities expect the RBA to hike at next month's meeting

Q3 CPI too high to risk holding

Today's Q3 CPI data handily beat the RBA's and analyst forecasts. Along with the Q2 trimmed mean measure being revised up and strong signs of domestic inflation, there is now a clear signal for monetary policy to respond.

We now expect the RBA to hike 25 bps at next month's meeting to 4.35% on the target cash rate.

We believe failing to act could harm the RBA's credibility.

The possibility of the RBA delivering a subsequent hike in 2024 cannot be ruled out.