RBA Pause Weighs on AUD Amid Above-Target Inflation and Sub-Potential Growth
The Reserve Bank of Australia (RBA) may extend its pause on interest rate hikes due to sub-potential growth and a cash rate near the top of neutral estimates, according to Brown Brothers Harriman's Elias Haddad. This could be a headwind for the Australian Dollar (AUD).
Haddad sees above-target inflation keeping RBA hike risks alive, with June and Q2 Consumer Price Index (CPI) expected to show firm trimmed mean readings.
Headline CPI is expected at 4.0% y/y for a second straight month while trimmed mean CPI is expected at 3.7% y/y vs. 3.6% in May.