Australia Inflation Exceeds Forecasts as Markets Price in RBA Rate Hike Next Week

According to Jin10, the Australian dollar rose to around 0.7035 against the U.S. dollar during Friday’s Asian trading session after inflation exceeded expectations, strengthening market expectations of an interest rate hike by the Reserve Bank of Australia (RBA). The Australian Bureau of Statistics said Wednesday that the consumer price index rose 4.3% year over year in September, above the 4.2% market forecast and August’s 4.0% increase. The rise mainly reflected higher housing and transportation costs, indicating price pressures were stronger than the RBA had previously expected. The Australian Securities Exchange’s RBA rate tracker showed the market pricing in nearly an 80% chance that the RBA will raise its rate to 4.85% at its next meeting, up from 62% before the data was released. Brown Brothers Harriman strategists said the latest inflation data strengthened the case for another RBA rate hike and supported the Australian dollar.