At the last policy meeting, the Reserve Bank of Australia remained firmly focused on returning inflation to target and signalled a willingness to tolerate some additional labour market softening to achieve that objective. The combination of a unanimous decision to hike, hawkish messaging and ongoing concern about excess demand led us to pencil in a 25bp hike in 4Q26. Since then, oil prices have risen further, suggesting headline inflation is likely to stay elevated in the fourth quarter. As a result, we continue to expect the RBA to deliver the 25bp hike at next week’s meeting rather than delay it to December, taking the cash rate to 4.85%.<\/p>\n
Since the last meeting, Australia has released August and September monthly CPI data, as well as the 3Q inflation report. All three prints were firm, with an overall 90bp increase in headline inflation from July to September, reinforcing the view that inflation has not yet made sufficient progress towards the RBA’s target.<\/p>\n
Almost all of the 90bp increase in headline CPI inflation of 4.3% YoY in September can be traced to higher transport costs, largely reflecting elevated fuel prices. However, the pass-through has not been confined to transport. Both goods and services inflation have also picked up, with annual inflation in each now running above 4%, suggesting that higher energy costs are feeding more broadly through the economy and adding to underlying inflation pressures. Core inflation, as a result, picked up pace both on an annual and quarterly basis, remaining well above the RBA’s target.<\/p>\n
In our view, the data should give the RBA greater confidence that underlying inflation is not yet on a sustained downward path, limiting the case for a pause and strengthening the argument for another rate hike.<\/p>\n","protected":false},"excerpt":{"rendered":"At the last policy meeting, the Reserve Bank of Australia remained firmly focused on returning inflation to target…\n","protected":false},"author":2,"featured_media":661150,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,184,85,46],"class_list":["post-661149","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-il","tag-israel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/661149","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=661149"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/661149\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/661150"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=661149"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=661149"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=661149"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}