AUD: CPI data slightly increase the odds of further easing next year - ANZ

Research Team at ANZ, notes that yesterday’s Australian CPI data provided some tentative signs of stabilisation in inflationary pressures, but it is too early to conclude that inflation has troughed.

Key Quotes

“Given this, we expect the RBA to retain its easing bias, but keep the cash rate on hold at 1.5% over our forecast period.

The outcome for underlying inflation is slightly below the RBA’s implied quarterly forecast and is likely to trigger a small downgrade to the Bank’s inflation profile in next week’s November SoMP (on 4 November).

Yesterday’s data slightly increase the odds of further easing next year, but we doubt the RBA would see any urgency for a policy response. While inflation is still low and has yet to stabilise, the Bank will be mindful of ongoing strength in the housing market and the potential for financial imbalances. The new, more flexible statement on the conduct of monetary policy provides greater scope to tolerate below-target inflation. Moreover, the domestic economy looks solid and commodity prices are rising.”