Australian inflation is anticipated to climb to 3.6 per cent year-on-year for the December quarter, a 0.2 per cent increase, according to consensus expectations. The Australian Bureau of Statistics is set to release the crucial data on Wednesday morning at 11.30am AEDT. The trimmed mean figure, a key indicator, is also forecast to edge up to 3.3 per cent from 3.2 per cent in the previous quarter, signalling persistent inflationary pressures within the Australian economy.
According to Capital.com senior market analyst Kyle Rodda, a higher-than-expected inflation result would significantly increase the likelihood of an imminent interest rate hike. Rodda cited the robust labour market and slightly improved household activity as contributing factors influencing potential monetary policy adjustments.
The financial markets are currently pricing in a 57 per cent probability of the Reserve Bank of Australia (RBA) increasing the cash rate at its upcoming February meeting next week. This expectation has intensified following the release of stronger-than-anticipated labour market figures that surpassed economists’ and market forecasts, further fuelling speculation about potential RBA action. The Reserve Bank of Australia is the nation’s central bank, responsible for maintaining financial stability. It also manages monetary policy and issues the country’s banknotes.
