Pepperstone logo
Pepperstone logo
  • English
  • 简体中文
  • 繁体中文
  • ไทย
  • Tiếng Việt
  • Español
  • Português
  • لغة عربية
  • Ways to trade

    Pricing

    Trading accounts

    Pro

    Premium clients

    Active Trader Program

    Refer a friend

    Trading hours

    24-hour trading

    Maintenance

  • Trading platforms

    Trading platforms

    TradingView

    MetaTrader 5

    MetaTrader 4

    CopyTrading

    Pepperstone platform

    cTrader

    Trading integrations

    Trading tools

  • Markets

    Markets to trade

    Forex

    Shares

    Indices

    Commodities

    Cryptocurrency

    Currency Indices

    Dividends for Index CFDs

    Dividends for Share CFDs

    CFD Forwards

    ETFs

  • Market analysis

    Market analysis

    Navigating Markets

    The Daily Fix

    Meet the Analysts

  • Learn to trade

    Trading guides

    CFD trading

    Copy trading

    Forex trading

    Commodity trading

    Stock trading

    Cryptocurrency trading

    Bitcoin trading

    Technical analysis

    Day trading

    Scalping trading

    Upcoming IPOs

    Gold trading

    Oil trading

    Webinars

  • Pepperstone Pro

  • Partners

  • About us

  • Help and support

  • English
  • 简体中文
  • 繁体中文
  • ไทย
  • Tiếng Việt
  • Español
  • Português
  • لغة عربية
  • Launch webtrader

  • Ways to trade

  • Trading platforms

  • Markets

  • Market analysis

  • Learn to trade

  • Pepperstone Pro

  • Partners

  • About us

  • Help and support

RBA
Inflation

Australia Q3 CPI reaction – hikes are back on the table

Chris Weston
Chris Weston
Head of Research
Oct 25, 2023
Share
Things move quickly when the central bank detail that their tolerance for inflation is low. Only recently it was the widely held consensus that interest rates in Australia were on hold for an extended period, and the next move was most likely a cut.

Well, that school of thought has been blown out the window and rate hikes are now once again being priced to rise. The question, it seems, from purely observing market pricing, is whether we see a hike in November, and then a pause, or we see back-to-back hikes in November and December.

The recent RBA minutes detailed that slower progress in getting to their inflation target (2-3%) would not be viewed favourably. This view was reinforced by RBA gov Bullock's speech (on Tuesday) when she detailed the bank won’t hesitate to hike if there is a material upward revision to the outlook on inflation. 

Consider the RBA forecast (in August) headline Q3 CPI at 4.5% and core Q3 CPI at 4% by December. So going off today’s numbers, with headline CPI at 5.4% and trimmed mean inflation at 5.2%, the prospect of a revision to the bank forecast in the upcoming Statement on Monetary Policy (on 10 Nov) is clearly very high – whether it is ‘material’ is a point of debate.

Granted, inflation continues to moderate, but the pace of the decline would be frustratingly slow in the RBA's view. We can also add the Q3 CPI print to a better-than-expected Q2 GDP print (at 2.1%), September unemployment at 3.6% and house prices further rising, and the RBA may see a hike as a necessary evil.

Market reaction

Australia's 30-day interest rate futures have reacted quite aggressively to the CPI data, and we now see the 18bp of hikes priced for the 7 Nov RBA meeting; equating to a 73% chance of a hike. If they don’t hike in November, December is priced at 100%. In fact, there is a small premium we could see at a 25bp hike in November and another 25bp hike in December. 

Preview

The rise in the market interest rate expectations, with a spike in Aussie 3yr govt bond yields from 4.18% to 4.28% has been good for 40 pips in AUD, with AUDUSD pushing to 0.6400. AUDCAD has been the biggest percentage mover on the day and has broken the October highs. AUDNZD has been a tear of late – and remains one of the cleanest expressions of Aussie rates – with price breaking through 1.0900 and into a big supply zone seen since June. 

Preview

In equities, we’ve seen the AUS200 falling from 6876 to hit a session low of 6832, although we’re seeing better buyers off these lows. ASX200 banks are heavy, as are REITS – consumer stocks are holding in remarkably well at present. 

Upcoming event risk for AUD and AUS200 traders

While the Q3 CPI was always the big event risk, if we look at data ahead of the 7 November RBA meeting, we only see retail sales (on 30 Oct) that could affect market pricing, but sales would need to be very weak. Developments in geopolitics and broad risk sentiment in markets could also play a factor, but again, it seems unlikely to derail market pricing/expectations. 

Governor Bullock speaks again tomorrow along with assistant governor Christopher Kent (09:00 AEDT), so this could give us a clear understanding of how the core of the RBA sees the CPI print – they could essentially guide to a hike here. 


Related articles

Interest Rate Review - what's "priced in?"

Interest Rate Review - what's "priced in?"

FOMC
Bitcoin – is this the time to chase the breakout?

Bitcoin – is this the time to chase the breakout?

Bitcoin
Crypto CFDs
Playbook For The October ECB Decision

Playbook For The October ECB Decision

EUR
A Traders’ Playbook; Buy risk assets when its darkest

A Traders’ Playbook; Buy risk assets when its darkest

Equity Markets
Market Events

The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.

Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.

Other sites

  • The Trade Off
  • Partners
  • Group
  • Careers

Ways to trade

  • Pricing
  • Trading accounts
  • Pro
  • Active Trader program
  • Refer a friend
  • Trading hours

Platforms

  • Trading Platforms
  • Trading tools

Markets & Symbols

  • Forex
  • Shares
  • ETFs
  • Indices
  • Commodities
  • Currency indices
  • Cryptocurrencies
  • CFD Forwards

Analysis

  • Navigating Markets
  • The Daily Fix
  • Meet the analysts

Learn to Trade

  • Trading guides
  • Videos
  • Webinars
Pepperstone logo
support@pepperstone.com
1786 628 1209
#1 Pineapple House,
Old Fort Bay, Nassau,
New Providence, The Bahamas
  • Legal documents
  • Privacy policy
  • Website terms and conditions
  • Cookie policy
  • Sitemap

© 2025 Pepperstone Markets Limited | Company registration number 177174 B | SIA-F217

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

81% of retail investor accounts lose money when trading CFDs with this provider.

You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

You don't own or have rights in the underlying assets. Past performance is no indication of future performance and tax laws are subject to change. The information on this website is general in nature and doesn't take into account your or your client's personal objectives, financial circumstances, or needs. Please read our RDN and other legal documents and ensure you fully understand the risks before you make any trading decisions. We encourage you to seek independent advice.

Pepperstone Markets Limited is located at

#1 Pineapple House, Old Fort Bay, Nassau, New Providence, The Bahamas

and is licensed and regulated by The Securities Commission of The Bahamas,( SIA-F217).

The information on this site and the products and services offered are not intended for distribution to any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.