Australia: Inflation is low, but unsurprisingly so – HSBC

By FXStreet FXStreet (Bali) – According to Paul Bloxham, Chief Economist, Australia & New Zealand at HSBC, another cut by the RBA is likely around mid-year, despite the upbeat Australian A4 CPI numbers.

Key Quotes

“Today’s Q4 CPI numbers showed the RBA’s preferred measures of underlying inflation are at the bottom edge of the 2-3% target band. The trimmed mean was 2.1% y-o-y (market had 2.1%), while the weighted median was 1.9% y-o-y (market had 2.1%) and the average of the two was running at 2.0% y-o-y.”

“These numbers were in line with the RBA’s own forecast for Q4 from its November official statement. Importantly, the RBA also remains more focused on the recent lift in jobs and activity indicators, so we expect them to be on hold next week.”

“However, with inflation at the bottom edge of the target band and growth unlikely to be above trend this year, we think another cut is likely around mid-year (pencilled in for Q2).”
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Source:: FX Street