Back
24 Apr 2013
Forex Flash: RBA lacks grounds to cut rates from 3.00% – UBS
FXstreet.com (Barcelona) - The Reserve Bank of Australia already has an easing bias and that was reinforced this morning by Q1 CPI inflation remaining low. The headline rate rose by 0.4%q/q and 2.5% YOY compared with 2.2% YoY in Q4'12. However, the underlying measures of inflation were soft.
The trimmed mean, weighted mean and other core measures showed consumer prices rising by just below 2.5% YoY according to UBS Economics. Moreover, “assuming an impact of about 0.25% from the carbon tax, underlying CPI is increasing by 2.00-2.25% YoY i.e. at the base of the RBA's target band. This isn't sufficient to cause the RBA to cut interest rates from 3.00% at its next meeting. However, the onus is on domestic data to pick up to prevent further easing.” notes the UBS Research Team.
The trimmed mean, weighted mean and other core measures showed consumer prices rising by just below 2.5% YoY according to UBS Economics. Moreover, “assuming an impact of about 0.25% from the carbon tax, underlying CPI is increasing by 2.00-2.25% YoY i.e. at the base of the RBA's target band. This isn't sufficient to cause the RBA to cut interest rates from 3.00% at its next meeting. However, the onus is on domestic data to pick up to prevent further easing.” notes the UBS Research Team.