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The Australian Bureau of Statistics revealed this morning that the consumer price index (CPI) climbed to 3.8 percent for the year ending in December. This marks an increase from November’s 3.4 percent and surpasses the anticipated 3.5 percent forecasted by economists.
Prior to the data release, Australia’s major banks were divided on whether the Reserve Bank of Australia (RBA) would raise the cash rate in the upcoming week. Market sentiment suggested a slight leaning toward an increase.
The Commonwealth Bank and NAB are both predicting a 25-basis-point rise next week, whereas Westpac and ANZ anticipate the rate will remain unchanged.
CBA’s senior economist, Trent Saunders, expressed last week that “there is some uncertainty around this timing, and the decision in February could be finely balanced.”
He further noted, “A rate hike in February will depend on the magnitude and nature of the inflation data, alongside the RBA’s evaluation of the broader economic landscape.”
“A hike in February will hinge on both the size and composition of the inflation print, as well as the RBA’s assessment of the broader economic environment.”
The RBA will hand down its next interest rate decision on Tuesday.
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