The Reserve Bank of Australia (RBA) is expected to maintain its current interest rate, with economists closely watching the upcoming release of the latest inflation figures. The RBA’s May forecasts indicated that inflation would return to approximately 3% by the end of the year, before gradually declining to 2.6% over the subsequent 18 months.
The central bank typically analyzes a “trimmed mean” measure of inflation, which excludes highly volatile price changes like those for electricity and petrol, to gain a clearer understanding of underlying price pressures. This core inflation measure was reported at 2.9% for the year ending in March, indicating a return to the RBA’s target band.
Economists will be scrutinizing the quarterly underlying inflation data, due for release on Wednesday at 11:30 am, for insights into future monetary policy decisions.
According to economist Callam Kearns, a significant deviation from the projected 0.7% quarterly increase in the underlying inflation figure for the June quarter would constitute a “surprise.” An annual rate reaching 3% or higher, which would correspond to a quarterly rise of 0.9% or more, would likely prompt the RBA board to reconsider its stance.
Conversely, economist Gareth Boyton anticipates the quarterly underlying inflation figure to be 0.6%, resulting in an annual rate of 2.7%. Though, he noted that even a 0.8% quarterly increase would present a “challenge for the board.”
