Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
A higher-than-expected September quarter Consumer Price Index sealed a 25bp hike at the Reserve Bank of Australia's November meeting, prompting some private sector economists to lift their terminal rates forecasts after the latest inflation data from the Australian Bureau of Statistics.
The headline CPI rose 1.8% q/q in the September quarter, driving an acceleration to a 7.3% y/y pace from 6.1% y/y rate in the June quarter. The y/y rate surpassed market expectations for a 7.1% rise. The trimmed mean rose 1.8% q/q and 6.1% y/y, up from 4.9% in the June quarter. The new monthly CPI showed a 7.3% y/y rise in September, up from 7% in August.
A 25bp hike to 2.85% is locked in for the RBA's November 1 meeting after policymakers surprised the market by downshifting to 25bps at its October meeting after four consecutive hikes of 50bp. The RBA had warned inflation would rise, though there is little sign that it has started to affect wage-setting. Deputy Governor Michele Bullock said on October 18 that the bank's monthly meetings allow it to adjust policy "potentially much faster than overseas central banks." (See MNI BRIEF: RBA Can Move As Fast As Other Banks - Bullock)
The surprisingly strong inflation print led economists to pencil in additional hikes, while some ascribed a small chance of a 50bp hike. Market pricing points to a terminal rate above 4% in late 2023. (See RBA : Sell-Side Revise Up Peak RBA Rate Forecasts In Response To Higher Inflation). MNI last week flagged the potential for an upside inflation surprise. (See MNI Insight: Upside Risks to Australian Inflation, But Will It Be Enough To Shift RBA Expectations?) The Australian dollar initially rose after the data release, trading up to around 0.64. (See AUD : Little Follow Through From CPI Beat)
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.