Inflation Data

Data released yesterday from the TD Securities-Melbourne Institute showed that inflation, at least in the short term eased to 0.1% for the month of September, and 1.3% over the last 3 months in annual terms. Whether or not this will be enough for the RBA to keep rates on hold, along with the weak data released last week, is the question that will be answered at 2.30 today.

With commodity prices back to near boom levels, and strong growth forecasts for China and India indicate that the economy will be pushed to near capacity levels, creating inflationary pressure. As the RBA will be looking 1.5 to 2.5 years ahead, the strong underlying fundamentals ensure that there will likely be a rise in the cash rate. The market has priced in a 72% chance of a rise today.