Australian Inflation Accelerates, Bolstering RBA Rate Hike Expectations
| Pair | Now | Since publish |
|---|---|---|
| AUDUSD | — | — |
- Australia’s headline inflation hits 4.3%, core at 3.7%.
- RBA sees inflation “too high,” hike likely at Nov 2-3.
- Fuel costs surge, AUD gains on RBA hike bets.
Australia’s Consumer Price Index (CPI) for the September quarter accelerated, with the headline annual rate reaching 4.3%. The Reserve Bank of Australia’s (RBA) preferred underlying inflation measure also rose to 3.6% annually. This acceleration in price pressures, with core inflation estimates around 1.0% quarterly, significantly surpassed the RBA’s prior forecast of 0.8%. The elevated inflation figures are sharpening market expectations for a potential interest rate hike at the RBA’s upcoming meeting, as officials have previously signaled concerns over a “materially worse” inflation outlook. This development is setting up the Australian dollar for a potentially bullish reaction, with implied rate hike odds increasing.
New data shows Australia’s September monthly CPI rose 3.9% year-on-year, while the Q3 quarterly CPI also increased by 3.9% year-on-year. Critically, the RBA’s preferred trimmed mean core inflation measure for September climbed to 3.7% year-on-year, exceeding forecasts of 3.6% and the RBA’s expectation for stabilization. RBA Governor Bullock stated that inflation will likely exceed the central bank’s August forecasts, attributing the deterioration to re-escalating Middle East conflict and higher energy prices. Bullock’s comments, including that inflation is “far too high” and that the RBA is less willing to ignore supply shocks, have made the November 2-3 RBA meeting live for a potential interest rate hike, supporting the Australian dollar and front-end yields.
Australia’s headline inflation rate has accelerated further to 4.3%, according to new data. The Australian Bureau of Statistics indicated that a 9.4% jump in fuel costs in September, with petrol and diesel prices 24% higher than a year earlier, was largely responsible for this acceleration. RBA Deputy Governor Andrew Hauser reiterated that inflation remains ‘too high’ and warned of a ‘central banker’s nightmare’, further sharpening expectations for a potential interest rate hike at the upcoming RBA meeting.