RBA governor Michele Bullock is staying quiet but the bank’s former top economist expects a rise on Melbourne Cup Day.
Former top Reserve Bank economist Luci Ellis has reversed course and now predicts borrowers will be hit with a rate rise next month, while the central bank’s governor, Michele Bullock, refused to be drawn on whether this week’s strong inflation figures alter the economic outlook.
“Because there is going to be a change to our forecasts. We have to look at whether or not it’s material enough to change our views on monetary policy.”to 1.2 per cent in the three months to September from 0.8 per cent in June.Analysts were quick to jettison forecasts of a November rate pause after the release of the figures, which were stronger than market expectations of a 1.1 per cent rise in the headline CPI and higher than the RBA’s official forecasts, prepared in August.
“So yes, I’ve seen enough to make my first-ever rate call to be a prediction of a hike,” Dr Ellis said, noting a November 7 rate rise was not the outcome the RBA would have hoped for. In a concerning sign for the RBA, measures of underlying inflation were also stronger than expected. Trimmed mean inflation, which strips out volatile prices, was 1.2 per cent in the three months to September – well above the RBA’s forecast of 0.9 per cent.Describing herself as “wary” of the data, Ms Bullock said inflation in the labour-intensive services sector was still higher than the central bank was comfortable with and reiterated the RBA may need to tighten policy further.
Shadow treasurer Angus Taylor on Thursday accused Dr Chalmers of “jawboning” Ms Bullock on interest rates. “Her endorsement of our fiscal strategy shows our efforts to address inflation are making a meaningful and positive difference according to the independent Reserve Bank,” he said.
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