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Australia July inflation prints above forecasts, raising odds of more RBA hikes
Australian CPI rose 3.5% year over year, while the RBA’s underlying measure was stuck at 3.6%, leaving the central bank less room to meet its 2.5% target without further tightening.
Australia’s July inflation came in higher than expected, according to Australian Bureau of Statistics data, with consumer prices up 3.5% year over year, down from 3.8% the prior month but above the 3.3% forecast by economists polled ahead of the release.
HousingWire notes that the Reserve Bank’s preferred underlying inflation measure, which strips out volatile items, did not ease as hoped and remained at 3.6%, complicating the RBA’s path to its 2.5% inflation target.
The Guardian Economics reports the print has increased fears that the RBA could deliver a fourth rate hike this year, after the central bank held the cash rate at 4.35% on 11 August. Minutes from that board meeting had already shown concerns that the 2.5% target may not be achieved by the end of next year without further action.
Brendan Rynne, KPMG’s chief economist, said the data supports a prolonged effort to bring inflation under control without further policy action, while Deutsche Bank’s Phil O’Donaghoe said the latest CPI leaves little room for the RBA to do anything other than follow through on its more hawkish stance, potentially as early as the next meeting in September.