Let me do today’s offering in a short and sweet kind of way. Forget whatever the media is telling you. They don’t know what they don’t know.
The greatest concern I have about this latest inflation report is that headline grabbers are telling you that you should forget about future interest rate cuts. I’ll be gracious and simply say about those journos: “Forgive them Lord for they know not what they say.”
One silly report talked about rate cuts being ‘done and dusted’ following the CPI number for July. But here’s the true story from the NAB economics team:
Here are the key points:
- The monthly CPI indicator jumped to 2.8% from 1.9% (NAB and consensus 2.3%)
- The annual trimmed mean also jumped to 2.7% from 2.1%.
- The surprise was strength in travel and timing of electricity subsidy payments. So, it’s not as material as it looks at face value.
- Even so, the RBA Q3 forecast was ~0.64% quarter on quarter for trimmed mean. 0.7% is now more likely, but a lot of data is to come.
Economists expected a rise with the end of the power subsidies, but it was all expected. The NAB team has said that the flow of economic data will determine the future rate cuts ahead. Anyone telling you that the latest CPI data will kill future rate cuts is a ninkapoop! |
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