Australia: Firming up Q1 CPI forecasts - TDS

Research Team at TDS note that Australian inflation in Mar rose by +0.1%/mth, the annual rate rising to a 13-month high of +2.2%/yr and as domestic inflation surged in the month while tradable inflation eased.

Key Quotes

“The trimmed mean also rose by +0.1%/mth, the annual rate easing from 2.3% to 1.6%/yr. We expect Q1 underlying inflation to pick up from 1.55%/yr to 1.89%/yr, released April 26.”

“Our forecasts are consistent with the RBA’s February projections (core rising to 2% by mid-year) and so supports its on-hold stance. The OIS strip is more or less flat to cash through to 2018.”

“March house price inflation at 13%/yr has returned to levels last seen during the 2009/10 RBA tightening cycle. Our RBA Nov hike view remains despite APRA’s new macro-prudential tool, announced Friday, and ASIC’s stepped up ’surveillance’ on interest-only loans today.”