MNI BRIEF: RBA Warns Against Reliance On Monthly CPI Print

The Reserve Bank of Australia Governor Michele Bullock has warned against focusing too heavily on volatile monthly inflation reads, noting June’s quarterly print will offer a far more comprehensive view on the direction of prices.

Bullock told a senate estimates committee Wednesday the RBA needed quarterly CPI results to help confirm monthly data. “You don't have to go back long, maybe a few months, when monthly figures were all surprising on the downside, and everyone was saying, 'oh, inflation is growing much more quickly. Interest rates are going to come down really quickly.' Now they've surprised a little bit on the upside.”

April's CPI indicator printed at 3.6%, up 10 basis points y/y from March.

Bullock stressed June’s quarterly print represented an important element for the RBA, but the board will also consider data within the national accounts and unemployment. "It's not the single most important thing, because it is a lagging indicator," she said.

Bullock added the board would not hesitate to act should inflation not fall in line with expectations. “If it feels that inflation is not coming down, or it’s not coming down quickly enough, or inflationary expectations are starting to get out of control – in those circumstances, the worst possible thing for employment over the long run is high inflation.”

MNI reported this week the RBA would look through volatile data prints. (See MNI POLICY: Markets Overplaying Impact Of Data Points On RBA)