Inflation surge should see rates left on hold

The Reserve Bank of Australia is widely expected to leave the official cash rate on hold next week, after new data from the Australian Bureau of Statistics reported a surge in inflation.


October 26, 2016

The Reserve Bank of Australia is widely expected to leave the official cash rate on hold next week, after new data from the Australian Bureau of Statistics reported a surge in inflation.

“Looking at the latest Consumer Price Index data from the Australian Bureau of Statistics, consumer prices rose by 0.7% over the last quarter – up from 0.4% in the June quarter,” Mortgage Choice chief executive officer John Flavell said.

“Not only was this result higher than last quarter, but it was also above economist expectations.  Moreover, the annual CPI rate quickened to 1.3 per cent from 1 per cent.

“With this in mind, I wouldn't be surprised to see the Reserve Bank of Australia choose to leave the official cash rate on hold when the Board meets on Tuesday.

Moving forward, Mr Flavell said even if the Reserve Bank of Australia does choose to leave the cash rate on hold in November, further rate cuts in 2017 cannot be ruled out at this point in time.   

“Rates could still fall lower over the coming months depending on what happens in the domestic and global markets. If this happens, all eyes will look to Australia's lenders to see if they follow suit and pass on the rate cuts to their customers.”


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