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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, Commodities

While headline inflation data for the June quarter released last week was a mild 0.5% and in-line with market consensus, the Reserve Bank of Australia’s preferred underlying measure was higher than expected. This was due to strong rises in a number of essential goods and services, but despite CPI now being at the top end of the RBA’s target band, there is no cause for concern. The outlook for inflation remains benign, underpinned by soft wage growth and an exchange rate that is no longer putting upward pressure on prices.

That said, the pick-up in underlying inflation should remind investors that the RBA’s most likely course of action is inaction, rather than still lower rates – which is what the market is currently pricing in.

Source: Rural Bank

 

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