Australian inflation data coming on Wednesday January 30 (due at 0030GMT)
Headline:
- expected 0.4% q/q, prior 0.4%
- expected 1.7% y/y, prior 1.9%
Trimmed mean (a core measure)
- expected 0.4% q/q, prior 0.4%
- expected 1.8% y/y, prior 1.8%
Weighted median (also a core measure)
- expected 0.5% q/q, prior 0.3%
- expected 1.7% y/y, prior 1.7%
Last week I posted: Australian inflation data due next week - preview of Q4 2018 CPI
This now via TD (in brief):
- Market median for trimmed mean is +0.4%/q, followed by +0.5%/q, within a relatively wide +0.3% to +0.6%/q. Weighted median is also within the same range, although +0.5%/q outpaces +0.4%/q.
- With such a near-unanimous prediction at +0.4/+0.5%/q the risk of a "surprise" on the day for markets is high. If the underlying inflation rate is 1.75%/y, we don't expect this report to impact 'neutral' RBA thinking or have a lasting impact on market pricing. Last quarter did not see upgrades to history, but we will keep an eye out for upgrades anyway, even if the market bias is to ignore them.
- If we are wrong: if core inflation repeats the nasty surprise of Mar qtr 2016 - where the annual rate sank to 1.5%/ y instead of the widely anticipated 2%/y, then all bets are off. The markets will price a rate cut for the February 5 RBA Board meeting and analysts will swiftly change their on-hold prediction. As there was no advance warning (i.e. switch to an easing bias first) for the RBA cut in May 2016, we expect a similar punchy reaction this time around.
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Could be a busy one tomorrow if we get a surprise as per TD here.
