First quarter inflation date due from Australia on April 24, at 0130GMT
I posted a preview here earlier
A key point is that core inflation (the 'trimmed mean' in the CPI data is a core measure) has been below the RBA target band for three years. While the RBA does fudge a little around this band, saying that they want core CPI in the band for the average of the cycle (more or less), three years of missing one of their (only) two mandates is just taking the piss really.
Still, they don't seem to care. And, credit where its due, to the extent it is due to the RBA, employment has been strong, the unemployment rate is low … so chalk one up for the other part of the mandate.
The headline to this the post is paraphrased from the NAB preview of the data:
The latest RBA Minutes outline the conditions that would see a cut to the cash rate:
(1) inflation disappoints
and (2) unemployment trends up
- … We expect core inflation to weaken in Qi, meeting part (1) of the Board's criteria.
According to the RBA's latest forecast (from February), it expects trimmed mean inflation to stay at 1.8% y/y in Q2 2019 - needing a print of at least 0.5% q/q in Q1.
- As such, we expect that a 0.4% q/q (1.7% y/y) outcome would force the RBA to, once again, push out its expected return to target, by half a year, to June 2020. If achieved, that would mean 4.5 years outside the RBA's 2-3% target.
NAB forecasts for the numbers:
- headline 0.2% q/q
- trimmed mean 0.4% q/q, 1.7% y/y
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ps. this morning NAB cut its mortgage rates by up to 36 basis points
- this makes NAB the third major lender in Australia to reprice its home loan rates over the past 2weeks
