Rising Australian inflation, "its not safe to conclude that the RBA rate cycle has peaked"

<p>The data released earlier is here:</p><ul><li><a href="https://www.forexlive.com/news/australian-august-monthly-inflation-data-52-yy-vs-52-expected-20230927/" target="_blank" rel="follow" data-article-link="true">Australian August monthly inflation data 5.2% y/y (vs. 5.2% expected)</a></li><li>that 5.2% headline is up from 4.9% in July</li><li>the trimmed mean measure is sticky, unchanged from July at 5.6%</li><li>the CPI excluding volatiles (see that link above for more on what these are) came in at 5.5% from July's 5.8%</li></ul><p>ING's response (in brief):</p><p>Australia: Inflation back on the rise
</p><ul><li>While this is mostly down to less helpful base effects, international energy prices and excise duty hikes, it is not safe to conclude that the RBA rate cycle has peaked</li><li>We think that if the RBA is going to hike again, it will need to be this year, as we don't believe the current inflation backsliding will last beyond the year-end. So we'd expect these cash rate futures to start pricing in more tightening sooner over the coming months, as headline inflation continues to go in the wrong direction. That may also provide some additional lift to the AUD, though for that, we also would like to see some generalised USD weakness, and the US inflation and rates story is very similar to that of Australia, so we aren't taking that for granted. </li></ul><p>—</p><p>As for timing of a rate hike, if the RBA leans that way, I think its unlikely at the October meeting (on Tuesday the 3rd). Its more likely that the Reserve Bank of Australia will wait to see the Q3 CPI data, which is published on October 25. The monthly CPI data from Australia, we got the August month print today, does not show all components of the CPI, that'll have to wait for the quarterly data release.</p><p>The November RBA meting is thus very much 'live' at this stage.</p>

This article was written by Eamonn Sheridan at www.forexlive.com.