If you've been paying attention to Goldman Sachs' call on the Reserve Bank of Australia you'll recall they've been in the November rate cut camp for a good while now

Today's CPI have reinforced their view, a 25bp cut next week

  • CPI "unquestionably weak"
  • We believe the RBA now has little choice but to ease interest rates in November
  • Underlying inflation rose by 0.29% q/q, the smallest amount since 3Q1997, and now sits firmly at the bottom of the RBA's target band
  • The trimmed mean has been clearly decelerating since mid-2014, and now requires a sharp reacceleration of 1.0%qoq in 4Q15 to approach the RBA's 4Q15 inflation forecast
  • Absence of tradable goods and services inflation despite the sharp prior fall in the Australian dollar suggests that policy makers have been overly wary of imported inflation pressures
  • Breadth of inflationary pressures is at a record low and our alternative measures of underlying momentum are weaker stil
  • It is now likely that the RBA will be downgrading both its inflation and growth forecasts in the November Statement of Monetary Policy
  • We expect -25bp rate cuts in Nov 2015 and March 2016