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Hot Australian inflation outlook keeps RBA rate hike debate alive
TD Securities projects core CPI to rise to 0.9% QoQ in Q2, lifting annual core inflation to 3.7% and reinforcing the case for possible further tightening.
The Australian dollar is trading with uncertainty as markets weigh stickier-than-expected domestic inflation against shifts in global risk sentiment, FXStreet reports.
FXStreet cites TD Securities projections for the RBA’s preferred trimmed mean core CPI to accelerate to 0.9% quarter over quarter in Q2 from 0.8% in Q1, bringing annual core inflation to 3.7%. The outlet also points to a June headline CPI forecast of 4.2% year over year, above the market consensus of 4.0%.
Housing-related components, including rents and new dwelling purchase costs, are highlighted as persistent sources of upside risk to inflation. FXStreet notes that a hotter CPI print could keep pressure on the RBA to consider further policy tightening later, with the labor market still described as resilient.
At the same time, FXStreet says recent weakness in global tech and AI-linked stocks has reduced risk appetite, weighing on the AUD as a high-beta currency. The outlet adds that RBA Governor Michele Bullock avoided explicitly signaling an imminent rate hike as soon as next month, tempering expectations for an immediate move and leaving pricing focused on the possibility of one increase later in the year.