Australian Inflation Report To Give Clues About RBA Action

July 25, 2023 21:23

The Australian CPI inflation data for the second quarter of the year due to be published on Wednesday morning could influence the Reserve Bank of Australia (RBA) interest rate decision scheduled in August.

The Australian inflation report is likely to be overshadowed by the US Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of Japan (BoJ) interest rate decisions expected later this week.

Chinese stocks got a boost earlier in the morning as the Chinese Politburo vowed on Monday to ramp up policy support to boost domestic consumption.

Australia CPI Q2 2023 Report

On Wednesday morning, the Australian Bureau of Statistics (ABS) will publish data related to the country’s CPI inflation. Economists expect inflation to come in at 6.2% on an annualised basis in the second quarter of the year, lower than the 7% figure recorded in the first quarter. They also anticipate that inflation could fall to 1% (from 1.4%) on a quarterly basis in the three months to June.

The RBA chose to keep interest rates unchanged in its last monetary policy meeting, so market analysts suggest that consumer prices figures could force it to act in the upcoming meeting in August. The unemployment rate remains at a multi-year low level while inflation readings remain far from the RBA’s target rate.

Goldman Sachs Says Crude Prices Likely To Rise

A report published by Goldman Sachs revealed that its analysts forecast a rise in crude oil prices in the near term. Analysts at GS wrote that all-time high demand in oil markets could lead to a “sizeable deficit.” The International Energy Agency in June had predicted that global oil demand is on track to rise by 2.4 million barrels per day in 2023, outpacing the previous year’s 2.3 million barrel per day increase.  

Speaking to CNBC, the GS head of oil research said that “key point here for investors is, with the uncertainty about oil demand being so elevated, investors may require a premium to compensate for the elevated risk from such heightened demand uncertainty. We expect pretty sizable deficits in the second half with deficits of almost 2 million barrels per day in the third quarter as demand reaches an all-time high.” The GS report sees crude oil prices rise to $86 per barrel by the end of 2023.

Chinese Leadership: Economy to Face New Challenges

As figures coming from the Chinese economy exiting the Covid-19 era have shown that domestic demand suffers, some analysts wonder how and if the plans for reviving the economy would prove fruitful.

The Chinese Politburo said that it would keep the yuan exchange rate stable while actively expanding domestic demand conditions. They also stressed that the external environment is complex and severe, adding that they would continue to implement prudent monetary policy.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Miltos Skemperis
Miltos Skemperis Financial Content Writer

Miltos Skemperis’ background is in journalism and business management. He has worked as a reporter on various TV news channels and newspapers. Miltos has been working as a financial content writer for the last seven years.