BNY’s Geoff Yu reports that Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter described Australia’s Consumer Price Index (CPI) as slightly softer than expected, mainly due to fuel prices, but stressed inflation remains above the 2–3% band. She highlighted still-tight labor conditions and resilient employment, while weaker sentiment has yet to hit spending, leaving AUD positioned for improvement if policy follow-through materializes.

CPI surprise but policy pressure

"RBA Assistant Governor Sarah Hunter said Australia’s latest CPI data was “a touch softer” than expected, with the downside surprise in headline inflation mainly driven by lower fuel prices."

"She said inflation remains above the 2-3% target band and the RBA must keep pressure on price growth so higher inflation expectations do not become entrenched. On the labor market, Hunter said conditions are still somewhat tight, though job growth has held up “not too badly” in the first half of the year."

"She cautioned that monthly labor data are volatile, but underlying employment momentum remains resilient."

"Hunter also noted that weaker consumer sentiment has not yet clearly fed through to household spending. AUD remains positioned for improvement, but policy follow-through is necessary."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)