The Australian inflation figures, surprising to the downside on Wednesday, have not gained much attention. Commerzbank economists analyze the outlook for the Australian dollar (Aussie) following the Monthly Consumer Price Index (CPI) report.
RBA Likely to Have Reached Interest Rate Peak in November:
The Reserve Bank of Australia (RBA) is believed to have reached its interest rate peak in November.With inflation decreasing and individuals facing higher mortgage rates, another rate hike seems unlikely.The market has adjusted expectations, correctly pricing out the probability of further rate hikes since November.However, the recent data indicates that rate cuts are also improbable in the near term.
RBA’s Response and Outlook:
If the RBA shares a similar interpretation of the data, it is expected to maintain its current stance and express skepticism about near-term rate cuts.The central bank is likely to emphasize its determination in the face of falling inflation.
Rate cuts may only become a realistic consideration if inflation continues to decline significantly from February.Until then, the Australian dollar is expected to receive support from the global inflation gap.
Commerzbank’s analysis suggests that the RBA is unlikely to pursue further rate hikes in the current economic environment, and rate cuts may only be considered if inflation continues to decline significantly in the coming months. The global inflation gap is expected to play a role in supporting the Australian dollar until there is further clarity on the RBA’s monetary policy direction.