Sticky CPI May Force More RBA Rate Hikes, TD Securities Warns
TD Securities warns that persistent Australian CPI — notably trimmed mean at ~4.2% and weighted median ~4.1% — keeps inflation well above the RBA’s 2–3% target and raises the likelihood of further monetary tightening. Services inflation (above 5%), housing costs, accelerating wage growth (~4.1%), and imported-price pressures are cited as key drivers. The cash rate target stood at 4.35% after 425bp of hikes since May 2022. Markets price roughly 40bp of additional tightening over the next 12 months; TD Securities sees at least one more 25bp hike as possible depending on incoming CPI, labor-force and business-survey data. Potential impacts: stronger AUD, tighter borrowing costs for mortgages and business credit, weaker housing construction and commercial real estate activity, and dampened consumer spending. Traders should monitor quarterly CPI (services components), monthly labor and wage reports, RBA statements and global central bank moves. This outlook is data-dependent; the path of inflation, wages and international conditions will determine timing and scale of further rate moves.
Bearish
Higher-than-target CPI and TD Securities’ signal that more RBA tightening is likely is generally negative for risk assets, including many cryptocurrencies. Rate hikes raise borrowing costs, strengthen the AUD, and reduce liquidity — factors that historically correlate with downward pressure on crypto prices in the short to medium term. Markets are pricing ~40bp more tightening; the prospect of at least one 25bp hike increases the chance of tighter financial conditions. Short-term impact: increased volatility and likely selling pressure as traders de-risk ahead of CPI and RBA communications. Longer-term: if sustained tighter policy cools domestic demand and global risk appetite, crypto could face extended pressure until inflation visibly recedes or monetary policy shifts. Parallel: crypto drawdowns accompanied past Fed tightening phases (e.g., 2022) when rising rates and reduced liquidity coincided with large price declines. However, if markets fully price-in hikes and inflation softens, the negative effect could be temporary, allowing a stabilization or recovery later.