HSBC's chief economist for Australia and New Zealand Paul Bloxham says, while the ABS monthly CPI Indicator is volatile, the scale of the upside surprise should cause some pause for thought about whether inflation will settle at the mid-point of the Reserve Bank's 2-3% target band. "This provides some evidence that although core inflation has been tracking towards the mid-point of the RBA's target band (trimmed mean was 2.7% y-o-y in Q2), and this has allowed the RBA to cut 75bp [basis points] so far, core inflation may end up stuck in the upper part of the 2-3% target, rather than eventually getting to its mid-point or below," he wrote. "Our central case is that the RBA will only be able to cut by a further 50bp in this easing phase (in November 2025 and February 2026), but we see the risks as clearly weighted to less easing than this, rather than more.
Author: David Chau
Published at: 2025-08-26 21:48:12
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