Australia: Core CPI gained further traction in Q4 – UOB

Economist at UOB Group Lee Sue Ann reviews the latest inflation figures in the Australian economy.

Key Takeaways

“Headline CPI surged in 4Q21. More importantly, core CPI surpassed the midpoint of the Reserve Bank of Australia (RBA)’s 2-3% target for the first time since June 2014.”

“The 1 Feb RBA meeting will take on a greater significance, given the scheduled review of the bond buying programme. We now think the RBA will decide to cease bond purchases altogether at the Feb meeting.”

“We still look for rate hikes only in 4Q23, though we now flag the potential risk for that to occur earlier than our projection.”