Only two more “sleeps” to the release of the June quarter inflation numbers, out on Wednesday, which seems to be the clear focus for financial markets this week, as well as the RBA. The path of monetary policy at next week’s RBA Board meeting is highly conditional on the inflation result, which raises the question, ‘on what CPI number does the RBA consider easing monetary policy?’
Analysts believe a June quarter CPI number at +0.3% or below is enough to see the market expect an RBA rate cut, while a number of +0.6% or above will see the RBA hold off. Economists are forecasting headline CPI of +0.4% for the quarter with annual inflation falling to 1.1%. The big unknown is how much the 6.5% rise in petrol prices over the quarter will translate into the CPI data.