A strong Q1 22 inflation reading on both the headline and trimmed mean measure set the market and economists reassessing the outlook for the Reserve Bank of Australia (RBA). Headline inflation rose by 2.1%/qtr and 5.1%/yr and trimmed mean rose by 1.4%/qtr and 3.7%/yr. The cost of building a new house, petrol, tertiary education and food prices all moved higher in the quarter. We are taking the RBA’s April Board Minutes at face value and expect the RBA to wait for “additional evi...
A strong Q1 22 inflation reading on both the headline and trimmed mean measure set the market and economists reassessing the outlook for the Reserve Bank of Australia (RBA). Headline inflation rose by 2.1%/qtr and 5.1%/yr and trimmed mean rose by 1.4%/qtr and 3.7%/yr. The cost of building a new house, petrol, tertiary education and food prices all moved higher in the quarter. We are taking the RBA’s April Board Minutes at face value and expect the RBA to wait for “additional evidence on the evolution of labour costs” before concluding that inflation is “sustainably within the target range”. We retain our call that we have held since February that the RBA’s tightening cycle commences in June and that they shift to an explicit hiking bias next week at the May Board meeting.
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