Bond traders have rapidly dialled back bets of an imminent interest rate cut in Australia after the Reserve Bank delivered an unexpectedly blunt message on inflation just days before its next board meeting.
Speaking in a fireside chat before Wednesday’s key third quarter inflation figures, RBA governor Michele Bullock said a 0.9 per cent increase for core inflation – which is 0.3 per cent percentage points above the central bank’s own projections – would be a “material miss”.
For the market, this suggests that the central bank is in no rush to lower borrowing costs. Most analysts forecast core inflation – the RBA’s preferred measure – to rise 0.8 per cent.
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