The Australian inflation data was ugly, higher than Q2 and higher than expectations.
- Australian Q3 2023 Headline CPI +1.2% q/q (vs. 1.1% expected)
- AUD/USD jumped higher on Australian inflation data, November 7 rate hike is likely now.
The CPI was the final piece of critical data the Reserve Bank of Australia was waiting for prior to its next meeting on November, 7. There is no reason at all now for the RBA not to hike. There is a meeting in December, but the RBA would prefer to get a hike in sooner rather than later, and in November instead of just prior to Christmas (even the RBA have political antennae).
- Inflation is rising. Domestic inflation (non-tradeables) is stronger than tradeables, despite rising fuel costs.
- The unemployment rate is close to five-decade lows and the employment market is still solid.
- The RBA warned us in its October meeting minutes: “the Board has a low tolerance for a slower return of inflation to target than currently expected"
- New RBA Gov. Bullock has shown in her public speeches since taking the job that she is inclined to take a harder, more hawkish, line than the previous Governor Lowe
November 7, folks. Lock it in.