Michael Plumb, Head of Economic Analysis at the Reserve Bank of Australia (RBA), said the RBA will keep using quarterly Consumer Price Index (CPI) inflation data for its forecasts. He also said the bank has been using the monthly CPI to assess underlying inflation.
The RBA is still focused on the quarterly Trimmed Mean. Any shift away from it is likely still some time away. The bank wants to decide which underlying inflation measures from the monthly data it would use if quarterly CPI stopped being the main reference.
Quarterly Cpi Remains The Primary Market Catalyst
Plumb said the RBA will consult widely and clearly explain its thinking before making any changes. He also said much of the inflation rise is concentrated in certain sectors, and that price pressures should ease over the next few quarters.
He added that labour market conditions are contributing to higher inflation. At the time of writing, AUD/USD was down 0.38% on the day at 0.7055.
Because the RBA is clearly focused on quarterly CPI, the biggest market moves are likely to happen around those releases. The next major date for traders is the Q1 2026 CPI release in late April. Until then, markets may spend weeks positioning. Derivatives that expire before the release may trade with a different volatility pattern than those expiring after the data is published.
At the same time, the RBA is watching underlying inflation each month. That can create smaller, shorter-term trading opportunities. The latest monthly CPI indicator for January 2026 showed a slight easing to 3.2% year-on-year. This supports the view that price pressures are starting to fade. It also supports short-term strategies that expect lower interest rates or a softer Australian dollar.
Trade Structure Around The Late April Cpi Event
If inflation continues to cool, the RBA’s next move is more likely a rate cut than a hike. That would likely weigh on AUD/USD, which is already near 0.7055. This backdrop can suit strategies like buying AUD put options or using bearish credit spreads to benefit from further downside or sideways trading. It also marks a clear shift from the more hawkish tone seen through much of 2025.
However, the comment about labour market pressure adds risk to a purely bearish view. Australia’s unemployment rate remains low at 4.0% in the latest release. That could keep wage growth and services inflation elevated. As a result, aggressive bearish positions could be exposed if upcoming jobs data surprises to the upside.
For that reason, the main approach is to structure trades around the late April CPI release. One option is to buy volatility using instruments like straddles, since implied volatility in the Australian dollar may rise sharply as the date approaches. The current quieter period may offer a chance to enter these positions at a lower cost.
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