From Fast FT:

  • With inflation now running at a two-year high, the Reserve Bank of Australia is going to be constrained from cutting rates

From AMP Capital economist, Shane Oliver:

  • The CPI result substantially reduces likelihood of another RBA rate cut – cash rate on hold at 2.5% until September or October, when they will hike

RBC Capital:

  • underlying numbers are very high… I have to say it’s uncomfortably high on a quarterly basis. In that regard, it seems less likely (for a rate cut)

Moody’s Analytics:

  • The lower Australian dollar has pushed up import prices, passing through to higher nationwide prices. The RBA’s breathing space to cut rates further is evaporating.

JP Morgan:

  • Previously forecast a February rate cit, now forecast on hold but a rate cut later in the year is more likely than a hike.
  • From their research report in the wake of the CPI release: “Recent history tells us that forecasting an extended period of RBA inactivity usually turns out to be a mistake… most likely outcome from today’s inflation (numbers) is that RBA officials will sit back and wait to see how much of the bounce in inflation today is reversed in Q1, and how AUD behaves” (quote via MNI, tk u)

Westpac:

  • signs of an impact from the weaker AUD are starting to come through
  • The details revealed a pick-up in the underlying pace. Remembering that Q4 is normally a softer quarter
  • Just as significant was that the RBA core measures were much higher than expected
  • For us, the main upside surprises in Q4 came through on the trade side, a 0.7%qtr vs. our forecast for a 0.3%qtr
  • With the local calendar now fairly light in coming days, AUD/USD shorts should be trimmed somewhat, leaving the pair higher even if bears trim the scope of the rally somewhat. The initial target would be 0.8925/50

CBA (Commonwealth Bank of Australia):

  • The CPI numbers will reinforce the idea that interest rate cuts are off the table and add support to the arguments from higher rates by the end of 2014

CommSec:

  • latest result is likely to see the RBA move from debating the merits of another cut to a more neutral stance
  • Rates likely to remain on hold for the next 6 months

Chief Economist of BT Financial Group, Chris Caton:

  • The surprisingly high CPI result takes further rate cuts off the table

Goldman Sachs:

  • The CPI resutls, while a clear upside surprise, is not a game changer. They are still expecting a MArch rate cut.

UBS:

  • The risk of a rate hike near the end of 2014 have risen
  • RBA will need to upgrade its inflation outlook as the trimmed mean core is now above what it was forecasting as a mid-2014 level
  • Rate cuts cannot now be justified unless there is much higher unemployment or lower inflation readings