Australia: CPI on track for the RBA – TDS

Sandeep Kanihama FXStreet Contributor

Australia’s Q2 core CPI rose by +0.5%/qtr and +1.8%/yr as widely expected (mkt 1.75%, TD 1.82%) and entirely consistent with the RBA’s projection of 1¾%/yr by midyear, and on track to reach 2%/yr by year end, notes the analysis team at TDS.

Key Quotes

“The AUD initially sank on the softer headline CPI print of +0.2%/qtr and +1.9%/yr (mkt +0.4%/qtr, +2.2%/yr). However, as this is not the RBA’s focus, AUD weakness is unlikely to be sustained.”

“As core inflation continues to slowly grind higher from the 2016 low of 1.5%/yr, and we see higher wage inflation in due course, we see the timing of the RBA’s first hike being closer to May 2018. OIS is fully priced for +25bp by September 2018.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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