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MNI BRIEF: RBA 25bp Hike Odds Firm As CPI Hits 32-Year High

MNI (PERTH)
(MNI) Perth
True

The Reserve Bank of Australia is expected to tighten monetary policy by a further 25bps at its February 7 meeting after the Q4 Consumer Price Index printed hotter than expected, prompting traders to nearly fully price in a 25bp hike.

While falling shy of the RBA's forecast for an 8% y/y rise, the 1.9% q/q and 7.8% y/y pace exceeded consensus forecasts for 1.6% q/q and 7.6% y/y. It was the highest annual CPI print since 1990, according to the Australian Bureau of Statistics. The RBA's preferred measure, the trimmed mean, rose 1.7% q/q or 6.9% y/y - above the 6.5% y/y forecast in November's Statement on Monetary Policy. Non-tradables and services inflation point to momentum in domestic sources of price pressures.

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The Reserve Bank of Australia is expected to tighten monetary policy by a further 25bps at its February 7 meeting after the Q4 Consumer Price Index printed hotter than expected, prompting traders to nearly fully price in a 25bp hike.

While falling shy of the RBA's forecast for an 8% y/y rise, the 1.9% q/q and 7.8% y/y pace exceeded consensus forecasts for 1.6% q/q and 7.6% y/y. It was the highest annual CPI print since 1990, according to the Australian Bureau of Statistics. The RBA's preferred measure, the trimmed mean, rose 1.7% q/q or 6.9% y/y - above the 6.5% y/y forecast in November's Statement on Monetary Policy. Non-tradables and services inflation point to momentum in domestic sources of price pressures.

Keep reading...Show less