We have lifted our forecast for Trimmed Mean Inflation from 0.8% to 1.1%, mainly due to higher inflation in the services sector for which the August report provides valuable information for the whole quarter.
The RBA is currently forecasting inflation by end 2023 at 3.9% (Trimmed Mean) and 4.1% (Headline).
In the Governor’s Statement the sentence “The central forecast is for CPI inflation to continue to decline and to be back within the 2–3% range in late 2025.
Governor Bullock has opted to maintain the status quo prior to reviewing her position once the staff’s revised forecasts are available for the November meeting.
On the basis of our revised inflation forecast we expect the September Inflation Report will provide grounds for the staff inflation forecasts for the end of 2023 to be revised a little higher but not threaten the key goal of reaching the inflation target by 2025.
We do not see such revisions as providing sufficient evidence for a rate hike at the November meeting.
- Westpac
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