Australian CPI Hot Again—Will the RBA Get Even More Fierce on Interest Rates?
The Australian dollar (AUD) weakened slightly against the US dollar (USD) on Wednesday, after surging more than 1% the previous day. The AUD/USD pair fell slightly as the AUD appeared less robust following the release of Australia's latest inflation data for December from the Australian Bureau of Statistics (ABS). The market is once again weighing: is this inflation "hot" enough to prompt the RBA to tighten further?
Data showed that Australia's CPI rose 3.6% year-on-year (YoY) in December, slightly higher than the previous month's 3.5% (revised from 3.4%), and in line with market expectations of 3.6%. The RBA's trimmed mean inflation rose 0.2% month-on-month (MoM) and 3.3% year-on-year (YoY). Meanwhile, the monthly CPI jumped 1.0% in December, up from 0% previously and higher than the 0.7% forecast.
Of concern, headline inflation remains above the RBA's target of 2–3%. This could strengthen the RBA's chances of maintaining a tight stance, especially if the latest PMI and employment data continue to support a still-strong economy. As a result, the AUD could remain sensitive: rising if the market becomes more convinced the RBA will be "hawkish," but easily weakening if the USD strengthens again or global risk appetite changes. (az)
Source: Newsmaker.id
