Inflation to stay on hold in first data post rates hike
The first round of inflation figures of the year will provide a clearer picture of whether the Central Bank’s recent interest rate increase is a one-time increase or a sign of future increases.
On Wednesday, January inflation data will be released for the first time since the Central Bank chose to raise interest rates to 3.85 percent in early February.
Headline inflation is largely expected to remain at 3.8 per cent, although economists from the Commonwealth Bank forecast a slight decline to 3.7 per cent.
Reduced average inflation, which excludes variable items, is expected to remain unchanged at 3.3 percent.
The measure is still above the Central Bank’s target range of two to three percent.
January data will coincide with the end of the last of the energy discounts, which will cause an increase in inflation.
But NAB senior economist Taylor Nugent said the end of the electricity bill rebate would not mean a big increase overall.
“We expect this to be offset by softer fuel and travel inflation in January, as well as policy changes that put some pressure on health and childcare inflation,” he said.
But even if inflation remains stable, economists still predict further interest rate hikes; The Commonwealth Bank and NAB predict the interest rate will rise to 4.1 per cent at the Reserve Bank board meeting in May.
Capital expenditure figures will also be released this week; A quarterly growth of 0.7 percent in new investments is expected to be approved on Thursday.
Meanwhile, Wall Street investors are expecting strong investment growth in the information media and telecommunications sectors after the U.S. Supreme Court struck down President Donald Trump’s global tariffs.
The court, with a conservative majority, ruled 6-3 against Trump’s global tariffs under a federal law for national emergencies.
S&P 500 closed Friday at 6,909.51 points with an increase of 0.69 percent.
Nasdaq increased by 0.90 percent to 22,886.07 points, while the Dow Jones Industrial Average increased by 0.47 percent to 49,625.97 points.
Australian stock futures rose 16 points, or 0.17 percent, to 11,293.
The S&P/ASX200 fell 4.8 points, or 0.05 percent, to 9,081.4 points on Friday, while the All Ordinaries fell 13.4 points, or 0.14 percent, to 9,303.2 points.
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