Australia: Q3 CPI inflation is still low, but RBA to remain on hold - HSBC

Research Team at HSBC, suggests that today's Australian Q3 CPI inflation numbers, once again, showed underlying inflation running below the bottom edge of the RBA's 2-3% target band.

Key Quotes

“The trimmed mean was in line with the market expectation, running at 0.4% q-o-q and 1.7% y-o-y, while the RBA's other preferred underlying measure, the weighted median surprised to the downside, running at 0.3% (market had 0.4%) and 1.3% y-o-y. Together, these measures show underlying inflation at 1.5% y-o-y. This certainly leaves the door open for the RBA to cut the cash rate if it wants to. However, with growth running above trend, the central bank having cut by 50bp since May this year and coal and iron ore prices having bounced, we expect this to be enough to keep the RBA on hold next week. We expect underlying inflation to lift soon and our central case has the RBA on hold at 1.50% in coming quarters.”