Low underlying inflation in Australia

In Australia, the Q3 CPI is the main data release due before the RBA board meets on 3 November, with the RBA staff publishing updated economic forecasts in the Statement on Monetary Policy on 5 November. 

The CPI will show that underlying inflation remained low, with the average quarterly increase steady at 0.5%. This would see annual inflation pick up to 2.4% as a very small rise in Q3 last year drops out of the annual calculation. 

"However, indirect signalling suggests that the RBA is likely to stay on the sidelines next month even with banks raising mortgage rates in response to tougher capital requirements", says Barclays.

The annualised inflation remaining at the bottom of the 2-3% target band could see the RBA trim its forecast profile and place some pressure on the RBA to cut rates. 

"With RBNZ and RBA likely to be on hold, while ECB and BoJ potentially signaling more easing to come, the boost to global risk sentiment could drive AUD and NZD outperformance versus the EUR and JPY in the near term", added Barclays.