The TD Securities – Melbourne Institute Monthly inflation index has been released this morning and showed once again that Australian inflation is subdued.
With a monthly increase of just by 0.2 per cent in November, following a rise of 0.1 per cent in October, and an increase of 0.2 per cent in September the rolling 12 month gauge is just 2.4% about mid range in the RBA’s band.
Inflation is a key driver of the RBA’s decision process.
Annette Beacher, TD Securities Head of Asia Pacific Research said in a note to clients: “For tomorrow’s RBA Board meeting, after three consecutive neutral communiqués we expect the RBA to remain neutral and on hold at 2.5 per cent, and the AUD at US0.91 cents is likely to be ‘high’ rather than ‘uncomfortably high’.”
“We expect all forthcoming RBA communiqués and speeches to continue talking down the AUD rather than hint at rate cuts. We are of the view that rising house price inflation and the recent spark in credit growth prevents entertaining another cash rate cut.”
So no inflation but no cuts any time soon either.