This is below the RBA's implied forecasts of around 0.6%q/q. The soft inflation measures are partially attributed to ongoing tradables price deflation linked to the strong exchange rate. That said, non-tradable prices rose by 1.0%q/q, less than the usual seasonal increase. The RBA are certain to cut rates in May now. Pricing for such an event is now 126% - signalling expectations for more than a 25bp cut. We see chances of more than a 25bp cut to be very slim and see the more likely debate to be whether the Bank will deliver back-to-back cuts in May and June. More in out note later
Monday, 23 April 2012
Australia Q1 CPI measures surprise lower across board
forex trading outlook today - Australia Q1 CPI measures surprise lower across board : Q1 CPI inflation measures surprised lower across the board. Headline CPI (nsa) came in at just 0.1%q/q, despite this being a seasonally strong quarter. Seasonally adjusted, consumer prices actually fell by 0.2%q/q, the first negative quarter for prices since Q1 2009. The annual rate of consumer price increase slowed sharply to 1.6%y/y from 3.1% in Q4. This is the first time that annual headline inflation has printed below the RBA's 2-3% target band since Q3 2009. Importantly for the RBA, trimmed and weighted median measures came in soft; these measures rose by 0.3%q/q and 0.4%q/q respectively (mkt: 0.6% for both; 4CAST: 0.5% for both).
This is below the RBA's implied forecasts of around 0.6%q/q. The soft inflation measures are partially attributed to ongoing tradables price deflation linked to the strong exchange rate. That said, non-tradable prices rose by 1.0%q/q, less than the usual seasonal increase. The RBA are certain to cut rates in May now. Pricing for such an event is now 126% - signalling expectations for more than a 25bp cut. We see chances of more than a 25bp cut to be very slim and see the more likely debate to be whether the Bank will deliver back-to-back cuts in May and June. More in out note later
This is below the RBA's implied forecasts of around 0.6%q/q. The soft inflation measures are partially attributed to ongoing tradables price deflation linked to the strong exchange rate. That said, non-tradable prices rose by 1.0%q/q, less than the usual seasonal increase. The RBA are certain to cut rates in May now. Pricing for such an event is now 126% - signalling expectations for more than a 25bp cut. We see chances of more than a 25bp cut to be very slim and see the more likely debate to be whether the Bank will deliver back-to-back cuts in May and June. More in out note later
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