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Australian CPI data due to be released at 02:30 BST | 21:30 ET

by xyonent
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Australian CPI data for May is due to be released at 2:30am BST.

As for the CPI to be released this week, some participants expect the MM measure of headline inflation to show flat prices due to holiday spending, seasonal discounts on clothing and lower retail gasoline prices, but the YY measure is expected to rise to 3.8% from 3.6%, which would be the highest YY measure since November 2023.

The Reserve Bank of Australia (RBA) held interest rates steady at its meeting last week but discussed the possibility of raising them amid persistent inflation concerns. These comments sent the Australian dollar higher across the board, in line with similar comments made at the RBA’s May meeting.

The only difference is that while Bullock said the possibility of a rate cut was not discussed at last week’s meeting, the market did not expect a rate cut to be discussed.

However, the movement of the AUD over the last week suggests that the market was only listening to the hawkish elements of the commentary, meaning that a CPI reading approaching 4.0% this week will spook the market a bit and raise hopes that a rate hike may occur at the next meeting in August or September.

RBA interest rate forecast

Financial markets currently rate the likelihood of interest rates remaining unchanged at the August meeting at 89%.

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