Expectations have strengthened for the Reserve Bank of Australia to raise its cash rate by 25 basis points to 4.85%, after third-quarter trimmed mean inflation came in at 1.0%, above the RBA’s 0.8% forecast. Thirty-one of 32 economists expect a hike, with Deutsche Bank the sole hold forecast; JPMorgan, HSBC, ING, and Natixis have joined the consensus. ANZ sees a risk of rates reaching 5.10% by December or February, while AMP expects a “hike-and-hold” scenario. The decision is scheduled for Tuesday at 2:30 p.m. AEDT, followed by Governor Michele Bullock’s press conference; data also showed house prices fell for a seventh month in October.
The bank sharply raised its CPI forecast from 3.6% while meeting details showed three members opposed the move to a 4.85% cash rate.
Read the full storyAnnual inflation accelerated in September, while the trimmed mean reached 3.6%; oil prices fell as diplomatic hopes over the Strait of Hormuz revived.
Headline annual inflation accelerated from 4.0% in August, while trimmed mean inflation reached 3.6% and unemployment remained at 4.7% in September.
September data bolstered rate-hike bets, with markets pricing an approximately 85% chance of a 25-basis-point increase before the central bank’s November 2-3 meeting.