Post #15873

Hot Inflation Lifts RBA Rate Hike Bets AUD/USD is trading higher by roughly 0.8% on the day, pushing up near recent highs. The Aussie is catching a bid after hotter-than-expected inflation data reinforced the case for more RBA tightening this year. Headline CPI came in at 3.8% YoY vs 3.7% expected, while trimmed mean CPI (a key core inflation gauge) rose to 3.4%, above forecasts and December’s 3.3%. The inflation print adds to an already firm domestic backdrop, with recent data showing low unemployment and elevated wage growth. That combination is keeping rate hike expectations alive. Markets are now leaning toward another RBA hike in May (with the cash rate potentially moving to 4.1%) and pricing in a meaningful chance of one more hike later in the year. That said, the RBA remains data-dependent, so incoming inflation and labor data will continue to drive AUD direction. - Alan