Andrew Ticehurst, Research Analyst at Nomura, notes that Australia’s headline CPI inflation rose by 0.4% q-o-q relative to consensus and Nomura forecasts of 0.5% q-o-q, while trimmed mean CPI printed at 0.5% q-o-q, in line with consensus and one-tenth below their expectation.
Key Quotes
“The data also showed modest upward revisions to Q1 CPI inflation, with the trimmed mean measure revised from 0.5% to 0.6% q-o-q, or from 0.53% to 0.56% q-o-q to two decimal places.”
“We characterise this data as broadly neutral, with headline CPI a fraction below consensus, trimmed CPI in line with consensus and modest upward revisions to Q1.”
“With trimmed mean CPI remaining at 1.9% y-o-y, the RBA can continue to characterise underlying inflation as running a fraction below the bottom of its medium term 2-3% target band. Given global risks, gently declining house prices and uncertain funding pressures, we believe it can continue to exercise patience, watching closely but doing little with its cash rate.”
“We continue to pencil in two 25bp rate hikes in 2019 but, in the same breath, note that our conviction here is quite low.”
“We continue to see fair-value for AUD at around 74 US cents, but see risk as leaning to the lower side, reflecting our cautious views on Asia and China.”
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