22 Jan 2015
Low Aus inflation allows scope for RBA cut - ANZ
FXStreet (Bali) - Riki Polygenis, Co-head of Australian Economics at ANZ, shares his thoughts on next week's Australian Q4 CPI data, noting that figures are expected to show a continuation of recent disinflationary trends.
Key Quotes
"Q4 inflation figures (due on Wed 28 January at 11:30 AEDT) are expected to show a continuation of recent disinflationary trends. Headline inflation is forecast at 0.3% q/q and 1.8% y/y. Within this, fuel prices will subtract (-0.3ppt), while the tobacco excise increase will provide some offset (+0.15ppt). Underlying inflation (average of trimmed mean and weighted median) is forecast at 0.5% q/q and 2.2% y/y."
"Policy implications: Low inflation outcomes and should allow scope for the RBA to cut the cash rate in coming months to further support domestic economic activity. Wages growth is low and petrol prices will subtract a further 0.6ppt from headline inflation in Q1 2015 if they hold at current levels. While the lower currency will continue to push up tradables inflation, recent inflation outcomes do not contradict our assumption that pass-through will be muted and protracted, while low global inflation outcomes will also help contain import prices."
Key Quotes
"Q4 inflation figures (due on Wed 28 January at 11:30 AEDT) are expected to show a continuation of recent disinflationary trends. Headline inflation is forecast at 0.3% q/q and 1.8% y/y. Within this, fuel prices will subtract (-0.3ppt), while the tobacco excise increase will provide some offset (+0.15ppt). Underlying inflation (average of trimmed mean and weighted median) is forecast at 0.5% q/q and 2.2% y/y."
"Policy implications: Low inflation outcomes and should allow scope for the RBA to cut the cash rate in coming months to further support domestic economic activity. Wages growth is low and petrol prices will subtract a further 0.6ppt from headline inflation in Q1 2015 if they hold at current levels. While the lower currency will continue to push up tradables inflation, recent inflation outcomes do not contradict our assumption that pass-through will be muted and protracted, while low global inflation outcomes will also help contain import prices."