Despite the RBA having repeatedly expressed caution about relying on the ABS monthly CPI indicator, traders have again done so.<\/p>\n
Yesterday’s rise in annual inflation to 3% (the very top of the RBA’s target band) has seen bets on a rate cut by November fall, taking the chances to roughly 50-50, as priced in the rates futures market.<\/p>\n
CBA’s new head of Australian economics, Belinda Allen, says the Reserve Bank will face an easy decision to hold rates next week, followed by a very difficult call in November.<\/p>\n
“The RBA are likely to find themselves in a tougher position than recent meetings,” she argues.<\/p>\n
“There is real tension building in the data flow.<\/p>\n
“The August CPI indicates material upside risks to Q3 inflation, a cyclical upswing in the activity data is also clear but there are signs of softer employment and moderating wages growth.”<\/p>\n
In fact, RBA chief economist Sarah Hunter told Parliament earlier this week that the Australian economy appeared to be in an upswing at the moment.<\/p>\n
That said, the upswing appears fairly moderate and interest rates, according to the RBA, remain restrictive, so perhaps there is still scope for one or two more cuts.<\/p>\n
This is especially so with jobs growth having basically evaporated over winter.<\/p>\n
“The last three months has seen employment gains of 23k, compared to 111k the prior three months,” Allen notes.<\/p>\n
“The unemployment rate though has held steady at ~4.2%. Our CBA wages tracker also shows a clear moderation in wages growth.”<\/p>\n
So, rising unemployment and rising inflation. Australia isn’t unique in finding itself in this position, but how will the RBA react?<\/p>\n","protected":false},"excerpt":{"rendered":"Despite the RBA having repeatedly expressed caution about relying on the ABS monthly CPI indicator, traders have again…\n","protected":false},"author":2,"featured_media":41452,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[3053,3055,3059,72,7388,3057,61,60,3061,3060,123,7389,3058,4012,3054,131,3056],"class_list":["post-41451","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-asx","tag-australian-dollar","tag-bitcoin","tag-business","tag-dollar","tag-dow-jones","tag-ie","tag-ireland","tag-live-blog","tag-live-update","tag-markets","tag-nasdaq","tag-nyse","tag-sp","tag-share-market","tag-stocks","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/41451","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=41451"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/41451\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/41452"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=41451"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=41451"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=41451"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}