Inflation easing ... for now: NAB
By
Adam Smith
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25/07/2011 3:00:00 AM
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Core inflation may just edge in under the RBA's target band when figures are released this week, but the reprieve may not last long, NAB has claimed.
The Reserve Bank has previously indicated inflationary figures due this week would set the course for future rate decisions. NAB has predicted a core CPI for the March quarter of around 0.7%. The bank commented that this result would likely see the RBA leave rates on hold in August.
NAB economists have predicted a slightly more moderate outcome for underlying inflation in the June quarter, following a 0.8% spike in the March quarter. Weakness in the housing and retail sectors will play into the June outcome, the bank said.
However, this moderation is not expected to last long, NAB has predicted. The bank has forecast inflationary pressures to continue to build throughout the remainder of the year. NAB has predicted a tight labour market, feeding into wage and cost pressures, will still see the RBA hike rates in December, and again in mid-2012.
While NAB has called on a marginal moderation for core inflation, producer price figures released today have tipped a higher-than-expected rise.
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