Australia: RBA could resume its hiking cycle – UOB

Pablo Piovano FXStreet

Economist at UOB Group Lee Sue Ann says recent higher-than-expected inflation figures in Australia could encourage the RBA to hike its OCR at the November meeting.

Key Takeaways

Headline CPI came in at 1.2% q/q for 3Q23, a tad higher than expectations of 1.1% q/q, and against a reading of 0.8% q/q in 2Q23. Compared to the same period a year ago, CPI rose 5.4% y/y in 3Q23, continuing to ease from the previous print of 6.0% y/y in 2Q23, though a tad higher than expectations of 5.3% y/y.

Meanwhile, the jobless rate fell from 3.7% in Aug to 3.6% last month even as employers shed 39,900 full-time positions. The swing factor was the drop in the participation rate, easing 0.3ppt to 66.7% in Sep from a record-high of 67.0% in Aug.

We have been penciling a chance of the Reserve Bank of Australia (RBA) hiking one last time this year, taking the cash rate target to a peak of 4.35%. In terms of timing, we believe this will occur at the 7 Nov meeting, following today’s release of the 3Q23 CPI.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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