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RBA seen likely to hold in August after softer-than-expected inflation

ActionForex.com says a downside inflation surprise removes the case for an August rate hike, and it expects no further RBA hikes this year.

Reported · Written up by our desk · Central Banks

A softer-than-expected inflation outcome is reducing the rationale for an additional rate hike by the Reserve Bank of Australia in August, according to analysis by ActionForex.com.

The outlet argues that the inflation data were more benign than it had anticipated, citing both the reading and the RBA forecast as factors weighing against further tightening.

ActionForex.com also notes that the early phase of higher energy costs showed substantial pass-through, suggesting the inflation outlook has shifted in a way that weakens the argument for raising rates further.

It adds that a downbeat narrative around supply conditions is also in question, contributing to its view that the RBA will not deliver rate hikes for the rest of the year.

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