VIEW: RBC Still Look For 25bp Hike In June

RBC note that “accordingly, from a policy perspective, today’s WPI data are only material in the debate over the size of rate hikes, and in particular whether a hike in June will be 25bp or 40bp/50bp given the debate at the May board meeting that was revealed in yesterday’s minutes. Today’s print was broadly in line with the RBA’s recent SoMP forecasts and at the margin supports a continuation of “standard” 25bp moves. This is our base case as we anticipate a series of 25bp hikes through to Nov, but we would not rule out a larger quantum against the step up by global central banks and a need for the RBA to move towards neutral sooner rather than later. Ultimately, we think the debate over 25bp or larger is still secondary to where terminal emerges (we see this at 1.85%).”