The data was released at 0130GMT, its here: Australia – Q2 CPI: +0.5% q/q (vs. +0.5% expected)

Reactions (where bolded, bolding is mine)

CBA:

  • The CPI result is “a warning sign that the inflation backdrop is not as benign as markets want to price in at the moment”

Stephen Koukoulas:

ANZ:

  • We view today’s outcome, and the inflation outlook more broadly, as neutral for monetary policy. It does not appear weak enough to justify a rate cut.
  • Equally, it implies little urgency for the RBA to wind back very expansionary monetary policy. That will continue to rest on confidence and activity in non-mining sectors, the labour market and the path of the Australian dollar
  • At this stage, we retain our view that the RBA will remain on hold until Q1 2015, with risks tilted towards a later start or a more protracted tightening cycle

David Scutt:

  • the 2.8% annual rate could well be the high point in this current inflation cycle
  • I don’t believe the RBA will be excited by this release with their neutral bias likely to be maintained at the upcoming August monetary policy meeting.

Paul Bloxham, chief Australia economist at HSBC Holdings Plc in Sydney:

  • Lowering the currency will be more difficult as it’s harder for the RBA to convincingly say that they’re likely to cut interest rates further when they’ve got inflation in the upper part of their target band

Shane Oliver, AMP chief economist:

  • Australian underlying inflation is in the top half of range but won’t bring forward an RBA rate hike as it was close to expectations & wage growth is weak
  • The average of June qtr mean & median inflation was 2.8% y/y, while the RBA ‘Statement on Monetary Policy’ forecast was 2.75%. So I can’t see much impact on RBA thinking from CPI

Sean Callow, strategist at Westpac Banking Corp. in Sydney:

  • For a market that has been leaning heavily toward another rate cut from the RBA, they were vulnerable to any upside surprise on inflation. Inflation is very muted globally and it wouldn’t have been a great surprise if Australia had a softish reading either, so when we didn’t get that, then you got the knee-jerk response on the Aussie.

JP Morgan chief economist Stephen Walters:

  • Core measures in Q2 CPI data weremixed, the trimmed mean higher than expected but weighted median unexpectedly low
  • Overall the surprise was to the upside
  • “This should scupper market speculation that the RBA has been edging closer to providing further policy support. Indeed, annual inflation on all of the main measures is tracking near the top of the RBA’s 2-3% target range … hardly are circumstances conducive to the RBA easing policy any time soon, particularly given the thus far modest softening of the domestic data, but nor do they signal that the cash rate is too low
  • he forecasts stability in rates for a period still

UBS:

  • “The RBA will be disappointed with this result. We keep our 2014 ‘on hold’ RBA view..there’s no room for a rate cut here”
  • Underlying … much higher than expected
  • In line with the RBA’s 2.75% forecast for Q2, but the trimmed mean 0.8% jump takes its y/y pace to a 4 year high of 2.9%