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yesterday

Soft November CPI Leaves RBA Waiting on Quarterly Gauge Before February Decision

A decision will come only after late‑January inflation data alongside fresh labour figures.

Pedestrians walk past the Reserve Bank of Australia building in central Sydney, Australia, February 10, 2017. REUTERS/Steven Saphore
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RBA governor Michele Bullock will announce the first interest rate decision of the year on February 3. NewsWire / Christian Gilles
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Overview

  • Australia’s CPI was flat in November, pulling annual inflation down to 3.4% as discounting in goods offset other pressures.
  • Underlying inflation stayed elevated at 3.2% on the trimmed mean, with rents and new dwelling costs rising and housing up 1.1% for the month.
  • The RBA has signalled it will weigh the January 22 labour report and the January 28 quarterly CPI, which it prioritises over the newer monthly series.
  • Markets now assign roughly a one‑in‑three chance of a February rate increase, with the Australian dollar and bonds little changed after the data.
  • Economists remain split: CBA’s Harry Ottley sees a roughly 0.9% trimmed‑mean quarter that would prompt a 25 bp hike to 3.85%, while Westpac’s Justin Smirk expects about 0.8% and a hold, with ANZ also tipping no move.