VIEW: CBA: CPI The Smoking Gun For Another 25bp Rate Hike At Feb Meeting

CBA note that “The RBA had expected inflation to peak at 8.0% by the end of 2022. Today’s headline inflation data was a little below their expectations. But the trimmed mean printed stronger than their forecast. “

• “The RBA maintained a hiking bias at the December Board meeting. And we expect them to deliver on that bias at the February Board meeting. More specifically, we maintain our forecast that they will raise the cash rate by 25bp to 3.35%.”
• “In the December Board Minutes it was stated that, “the Board is prepared to keep the cash rate unchanged for a period while it assesses the state of the economy and the inflation outlook”.”
• “We continue to see the RBA pausing in their tightening cycle at the March Board meeting. Inflation expectations remain anchored and the recent business surveys suggest that inflation pressures are starting to dissipate, albeit from elevated levels. Notwithstanding, the risk sits with a further rate hike at the March Board meeting.”