Analysts at Royal Bank of Canada (RBC) offer a sneak peek at what to expect from Tuesday’s Reserve Bank of Australia (RBA) monetary policy decision due to be announced at 0330 GMT.
“Q3 CPI … adds pressure on the RBA to deliver further easing at its next board meeting on 3 Nov, especially given its recent shift in focus to actual rather than forecast inflation.”
“The 19th consecutive quarter or almost 5 years that annual core inflation has been below the floor of the 2-3% target.”
“Given the degree of excess capacity amid an uncertain recovery, rising labor market slack and persistent low productivity, we think core inflation is likely to edge towards 1% in the coming quarters with a disinflationary pulse remaining.”
“This will keep pressure on the RBA to deliver further easing beyond the next board meeting where expectations are higher for multiple measures.”