Aussie would probably be massively punished if the RBA did not act against stubborn inflation – Commerzbank

Economists at Commerzbank analyze Aussie outlook ahead of next week’s Australian inflation data.

Inflation data is likely to be what matters for the RBA now

What matters now for the Reserve Bank of Australia (RBA) will probably be the inflation data for Q3, which is due for publication next week. In particular as the new central bank governor Michele Bullock, has voiced concerns that inflation might turn out to be quite stubborn and that inflation might rise again.

If next week’s inflation data confirms Bullock’s concerns a further rate hike in early November is quite possible and certainly required at that point from the market’s point of view. If despite these developments the RBA did not act, AUD would probably be massively punished by the market.