MNI BRIEF: RBA Rate Hikes Subdue Aussie Inflation Expectations

Australian consumer inflation expectations continue to moderate in the wake of the Reserve Bank of Australia's 6 consecutive rate hikes, according to the Melbourne Institute survey released Thursday, with the outlooks for both pay and prices over the coming year stabilising. The Survey of Consumer Inflationary and Wage Expectations showed the expected inflation rate steady at 5.4% in October, while total pay was expected to grow by 0.9% over the next 12 months. Inflation expectations peaked at 6.7% in June.

The RBA said medium-term inflation expectations "remain well anchored" in its Oct 4 statement, while delivering a smaller-than-expected 25bp hike to 2.6% (see MNI STATE OF PLAY: RBA Taps Brakes, Sees Slower Pace Of Hikes). While the RBA's Monetary Policy Statement forecast inflation of 7.75% by the end of the year, there have been signs inflation pressures may be easing. The monthly Consumer Price Index indicator eased to 6.8% in August, down from 7% in July, according to the Australian Bureau of Statistics.

September quarter CPI is released on October 26 -- along with the first in step release of the new monthly series -- a week before the RBA's November 1 meeting where it is expected to raise rates 25bp. Further insight into the RBA's thinking will come from the release of October's board minutes and a speech by Deputy Governor Michele Bullock on October 18.