Australian inflation data (Q4 2021) is due Tuesday – preview (and RBA implications)

Commonwealth Bank of Australia analysts are forecasting the headline at 3.2%.

The Reserve Bank of Australia target band for underlying inflation is 2-3% (over the course of a cycle … which gives the RBA quite a lot of flexibility in how it interpret inflation data, like it or not).

Expectations for the ‘core’ inflation rate is in the middle of that band though, at 2.4 to 2.5%.

CBA highlight that a core reading “in line with our forecast would be a big upside surprise compared to the RBA’s central scenario for the inflation outlook”. The background to this is the past 6 years of core being below target. CBA go on, projecting a Reserve Bank of Australia rate hike later this year:

  • It is our expectation that the upcoming CPI will be the smoking gun that sees the RBA end the bond-buying program at the February board meeting.
  • It should also lay the groundwork for a rate hike in late 2022.

Last week I posted on what Westpac and ANZ are expecting from the RBA at the February meeting (Feb 1):

rba building

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