Overview
- Headline inflation rose about 3.8% year on year in December and the trimmed mean reached roughly 3.4%, with housing and services driving persistence.
- All four big banks now forecast a 25bp increase at the February meeting, and futures pricing reflects a full hike probability that has supported the Australian dollar.
- ING cites sticky services inflation and resilient employment as reasons to tighten cautiously, while MUFG and CBA see a February move with CBA flagging a risk of a second hike if pressures persist.
- Opinions diverge on timing, with Moody’s Analytics saying the data challenge the RBA to act promptly and AMP’s Shane Oliver urging a wait‑and‑see approach to avoid unnecessary damage to growth.
- Roy Morgan estimates a 25bp rise could push about 1.3 million mortgage households into stress, a concern sharpened by CPI’s exclusion of mortgage interest and existing dwelling prices.