AUD: Softer CPI tempers RBA hike odds – Deutsche Bank

Deutsche Bank analysts highlight that Australian Consumer Price Index (CPI) rose 4.6% year-on-year in March, slightly below expectations, while trimmed mean inflation stayed above the Reserve Bank of Australia's (RBA) target band. Three‑year bond yields fell and futures-implied odds of an RBA hike next week dropped to 68%, as markets weighed softer core data against still‑elevated Oil prices in Q2.

Inflation eases but remains high

"Australian CPI rose by +4.6% year-on-year in March, marginally below the anticipated +4.8%, but it increased significantly from the 3.7% recorded in the previous quarter."

"Core inflation, as indicated by the trimmed mean CPI, rose by +3.3% in March, remaining steady from the previous month while still surpassing the Reserve Bank of Australia’s (RBA) annual target of 2% to 3%."

"Q1 trimmed mean came in at 0.81% qoq around a tenth softer than expectations but Q2 so far has continued to see oil prices high so there won't be too much comfort with that print."

"For now, yields on the 3-year policy-sensitive Australian government bonds are down by -4.5 basis points, currently standing at 4.68% as we go to print."

"The probability of a hike next week based on futures are down 15pp to 68%."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)