AUD Hike Debate Alive Amid Rising Inflation Concerns

Australian dollar (AUD) watchers are keeping an eye on inflation risks after TD Securities strategists forecasted a rise in core Consumer Price Index (CPI) for Q2.

The strategists expect the RBA's preferred core CPI to increase by 0.9% q/q, matching consensus and up from 0.8% in Q1, which would lift annual core inflation to 3.7%, just below the RBA's projection of 3.8%.

This forecast also includes a prediction for headline CPI at 4.2% y/y in June, with higher rents and dwelling costs posing upside risks to their estimate.