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Annette Beacher, Chief Asia-Pacific Macro Strategist at TD Securities, notes that Australia’s September quarter core CPI rose by +0.3%/q and 1.75%/y and while this fell short of TD/median looking for 1.9%/y, it was entirely consistent with the RBA’s August prediction that underlying inflation would temporarily dip to 1 ¾%/y this quarter due to lower administrative charges.

Key Quotes

“”The recovery in core inflation from the end-2016 low of 1.44%/yr is now painfully ‘gradual’, and provides ample justification for the RBA to pause for longer.”

“We nevertheless look for higher rates as bloated household debt won’t correct itself. We await Q3 wages on the 14th to reassess our base case of +50bp over 2019.”