Australia's Flash PMIs suggest that the initial impact of global trade tensions has been modest, with output remaining firmly in expansionary territory in April. What's more, with domestic demand strengthening, firms also reported raising their selling prices. In our view, a resurgence in inflation appears unlikely. That said, with economic activity picking up and the labour market set to remain historically tight, we doubt that the RBA will cut rates as aggressively as markets are pricing in.
Note: We'll be discussing the Australian Q1 CPI release and its implications for the policy outlook and financial markets in a Drop-In on Wednesday, 30th April. Register here for the 20-minute online briefing.
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