RBA Faces High Inflation Woes Ahead of Key Data Release
Australia's big four banks are forecasting high inflation rates in the June quarter, which could keep the Reserve Bank of Australia (RBA) cautious about easing monetary policy. According to CBA, NAB, Westpac, and ANZ economists, trimmed mean inflation is expected to rise 0.9% over the quarter, pushing annual core inflation to 3.7%, above the RBA's target band of 2-3%. Quarterly headline inflation is forecast to ease slightly to 0.7%, from 1.4% in the previous quarter, due to lower fuel prices driven by excise.
The Australian Bureau of Statistics (ABS) is set to release Consumer Price Index data on Wednesday, which will show the actual results for the June quarter. If realized, these forecasts could dash the chances of another Reserve Bank rate hike, as Governor Michele Bullock has mentioned that higher interest rates are slowing down the economy as intended.
Underlying inflation has been above the central bank's target since the COVID-19 pandemic, and analysts expect data to be released by the Australian Bureau of Statistics on Wednesday. The RBA will likely keep a close eye on these numbers, given their impact on monetary policy decisions.