TD Securities client note on the monthly inflation data out earlier today
(Data is here: Australia - Melbourne Institute Inflation (February): -0.3% m/m (prior 0.6%) )
On the inflation report:
- The low point for annual tradable and domestic inflation appears to be mid-2016, and so perhaps we can entertain the idea of upside risk for Q1 CPI (released April 26).
- We expect a step higher in both tradable and domestic inflation for the Mar qtr.
- We expect the official Mar qtr trimmed measure to increase by +0.65%/qtr, or increase from 1.64%/yr to 2.0%/yr, and combined with the weighted median, we expect "underlying" inflation to increase from 1.55% to 1.92%. This would be a little firmer than the RBA's 2%/yr projection for mid - 2017.
Their Reserve Bank of Australia meeting outlook for tomorrow (announcement comes at 0330GMT):
- We expect the RBA Board tomorrow to remain neutral, reiterating that inflation remains low and that current policy settings are "consistent with sustainable growth in the economy and achieving the inflation target over time"
- TD base case +25bp in November
- There isn't much to expect for this meeting
- We don't expect any shift from the Bank's neutral rhetoric until the third quarter
