Daily Commentary BY THE CURVE TEAM –

Key Update Ahead

26th of April, 2021

A data release critical to determine the RBA’s next move is released this week.

CPI data for Q1 is released on Wednesday. Inflation and unemployment are the two key variables in determining the RBA’s policy.

With employment running hotter than the RBA anticipated, if inflation overdelivers then it could lead to the RBA tightening their policy sooner than was otherwise expected. For Q1 inflation is expected to rise 0.9% and the trimmed mean by 0.5%.

Q2 inflation data will likely coincide with the RBA’s decision on whether they will maintain the yield curve target and/or extend QE. The Q1 data will give an idea of how inflation is tracking in the lead up to that decision.

Also released this week is credit data for March. This will likely be influenced by the expiry of the HomeBuilder scheme.

Credit is expected to have risen 0.3% in March. Over the middle of the year we will get a better gauge of what levels of credit growth are sustainable.

Josh Stewart

Associate - Money Markets