The Australian sharemarket jumped after the consumer price index slowed by more than economists had expected.
Josh Gilbert, market analyst at eToro, said the inflation figure would need to be “stupendous” to stop the Reserve Bank from increasing the cash rate by a quarter of a point next month, given a red-hot labour market and the board’s continued declarations of inflation being too high.
The monthly consumer price index for May will be released at 11.30am AEST, and forecasts are of a rise of 6.1 per cent. “A reading below 6.1 per cent should be met with optimism from the market, given it shouldn’t ignite any further hawkishness from the Reserve Bank,” Gilbert said. The local sharemarket had come under pressure this year because of financial markets pricing in further tightening from the central bank, he said.
“A change in the aggressive stance from the RBA would be good news for the local market, especially if the cash rate can stay below the now-expected 4.6 per cent.”
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