Attention refocuses on the health of the Australian economy this week with the release of the September quarter’s Consumer Price Index (CPI) on Wednesday and the start of month economic data, with building approvals, also for September out on Thursday.
As well there’s a speech from RBA Governor Lowe tomorrow evening in Canberra will be watched closely for any hints on how inclined the RBA is to cut rates again and when.
The speech will be at the start of the central bank’s blackout period ahead of the monthly board meeting next week that is widely tipped to reveal a 4th rate cut this year.
That meeting will consider the new economic forecasts from the RBA that will be published in the 4th and final Statement On Monetary Policy for 2019 to be released a week this Friday.
The release of the CPI data on Wednesday will be weak – 0.4% to 0.6% seems to be the range with consensus around 0.5% for an annual rate of 1.6% or 1.7%. That’s well below the RBA’s target range of 2.5 to 3% over time.
The AMP’s Dr Shane Oliver wrote in a weekend note that “Tobacco excise will drive another strong rise in alcohol and tobacco prices, but petrol prices look to have fallen slightly, seasonal weakness is likely in education and health costs and underlying inflation is likely to be kept down by ongoing spare capacity in the economy, weak wages growth and retailers struggling to pass through the impact of the lower $A to consumers in the face of weak demand.”
“Continuing weak and below-target inflation is consistent with our view that the RBA will undertake further monetary stimulus initially via more interest rate cuts in the months ahead,” Dr. Oliver wrote.
The average of the trimmed mean and weighted median CPI measures – the RBA’s preferred gauges of tracking underlying price pressures – is tipped to increase by 0.4% for the quarter and 1.6% over the year.
Other data releases this week include September building approvals on Thursday), September private credit growth (also Thursday) and CoreLogic house price data for October which is forecast to show a further solid gain in dwelling prices driven again by Sydney and Melbourne but with Brisbane prices also starting to pick up.
