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Australian core inflation outlook keeps RBA hike debate active
TD Securities expects the RBA’s preferred core CPI to rise to 3.7% year on year, while it flags upside risks from rents and dwelling costs.
TD Securities strategists said the Reserve Bank of Australia’s hike debate remains in focus as they expect the RBA’s preferred core CPI to increase 0.9% quarter on quarter in the second quarter, up from 0.8% in Q1 and in line with consensus.
They project annual core inflation at 3.7%, slightly below the RBA’s 3.8% forecast, and they also see headline CPI rising to 4.2% year on year in June. The note points to higher rents and dwelling costs as potential sources of upside risk for inflation.
The broader currency backdrop was also discussed in the same market note, with the Australian dollar tied to shifting expectations ahead of major central bank decision making. The piece additionally referenced cautious positioning ahead of the US Federal Reserve’s two day policy meeting, which has been supporting the US dollar through risk and safe haven flows.