Revising Australian inflation target lower

As an addendum to yesterday’s note about where I see the Australian inflation rate moving to along with interest rates;

The chart below shows the symbiotic dance between the AUD/JPY currency cross and the Australian CPI reading.

AUD/JPY has just traded at some extreme overbought. I think the gravitational pull of its 200 week moving average will see Australian CPI record a reading of somewhere around 3.5% – 3.8% in the coming months.

This revises lower the 4.8%-5% view I had written in yesterday’s note.

June 29, 2023

by Rob Zdravevski

Karri Asset Advisors

rob@karriasset.com.au