Rba Focus On Underlying Inflation Measures
Australia’s monthly CPI is the main inflation gauge, but the Reserve Bank of Australia focuses on underlying inflation measures in the quarterly CPI. The RBA has warned that inflation may stay above target for some time, with risks tilted to the upside, including to inflation expectations. The RBA also noted that uncertainty in the Middle East could affect global and domestic inflation under various scenarios. Q1 CPI is due on 29 April, ahead of the RBA decision on 5 May. Markets are pricing a 65% chance of a 25 bps rise to 4.35% on 5 May. The piece was produced using an AI tool and reviewed by an editor, and it was published by the FXStreet Insights Team. The AUD/USD is currently trading near 0.6550, testing the lower end of its range from the past few months. While the most recent inflation data was a little softer than some expected, the outlook is for price pressures to pick up again. This creates a tense situation ahead of key data releases.Markets Brace For Q1 Cpi And Rba Decision
February’s monthly headline inflation came in at 3.5%, which is still well above the Reserve Bank of Australia’s target band. We remember how core inflation proved sticky throughout 2025, and with the trimmed mean measure now at a stubborn 3.6%, the RBA has little reason to relax its stance. The final leg of getting inflation back to target is proving to be the most difficult. A primary driver for this caution is the persistent strength in energy prices, with global crude oil holding above $85 a barrel. This directly feeds into the RBA’s recent warnings about upside risks to inflation coming from global developments. This makes the upcoming quarterly inflation report the single most important data point for the near term. Given this outlook, markets have pushed back expectations for any RBA rate cuts until late in the year. Derivative traders should anticipate a rise in volatility leading up to the Q1 CPI data on April 29. The subsequent RBA policy decision on May 5 will be almost entirely dependent on whether that inflation reading shows any significant cooling. Create your live VT Markets account and start trading now.
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