VIEW: ANZ: Australia's Inflation Peaking, RBA To Go 50bp In August

ANZ note that “Australia's Q2 CPI came in below our expectations, with headline inflation at 6.1% y/y and trimmed mean at 4.9% y/y. It looks like we’re moving past the peak in quarterly inflation, but it’s a high peak to come down from, with the quarterly result annualising at 7.4% for headline and 6.1% for trimmed mean. This doesn’t change our view on the RBA’s near-term meetings, where we expect 50bp hikes. The target cash rate is still well below the RBA’s estimates of neutral, and we expect the labour market to continue tightening. This will prompt the RBA to take the cash rate above the lower bound of what it deems the neutral range. As such, we maintain our 3.35% year-end forecast.”