Australian CPI data due this week, a key critical input to next RBA interest rate deciison

The Reserve Bank of Australia meet on August 5 and 6. Ahead of that, on July 31, are inflation data for Q2 2024 and June 2024. Both are due at 11.30 am Sydney time on Wednesday, July 31 (0130 GMT and 2130 US Eastern time on Tuesday).

Snippet preview points via Commonwealth Bank of Australia:

• Q2 24 CPI in focus as the key near-term data point.
• will make or break the near-term case for an interest rate increase at the August Board meeting
• The Q1 24 CPI and recent monthly CPI indicator outcomes have been above expectations, and the RBA has sharpened language on the inflation outlook
• the prospect of a hike in August hinges on the RBA’s preferred measure of underlying inflation, the trimmed mean.

The three scenarios to watch:

• Our forecast for next week is for trimmed mean inflation to increase by 0.9%/qtr and 3.9%/yr. In our view this would give the RBA enough breathing room to leave rates on hold, despite it being marginally above their implied forecast of 0.8%/qtr.
• We see a print of 1.0%/qtr to be in the “grey zone” where they could hold or could hike depending on the component details.
• A print of 1.1%/qtr or above would test the Board’s resolve and shift the balance of probabilities to an interest rate increase.

This article was written by Eamonn Sheridan at www.forexlive.com.