Barclays have downgraded their AU CPI.....>

AUSTRALIA: Barclays have downgraded their AU CPI expectations following "the

downside surprise in Q2 CPI, lowering average inflation projections marginally,

to 2.0% from 2.2% for '18 & to 2.3% from 2.5% for '19. However, our forecasts

for underlying inflation remains unchanged at 2.0% for '18 & 2.2% for '19. The

downgrade reflects the underwhelming Q2 CPI, but we still expect a gradual

pickup in headline & core inflation through the next few quarters. Volatile food

prices & ongoing supply-side shocks will also add to inflation vol. However,

with benign wage pressures & a gradual fall in the unemployment rate, inflation

is unlikely to be a pressing issue for the RBA. From a MonPol perspective, low

inflation is not a constraining factor in maintaining a neutral pol stance. We

maintain our forecast that the RBA's next move will be a hike. We believe the

domestic econ. remains robust, which augurs for higher rates over the next 12-

18 months, but we acknowledge that our forecast of 50bp of hikes in H119 faces

risks of delay."