Closing Bell 27th September: Inflationary Pressures Test New Reserve Bank Governor

RBA Inflation Battle

New Reserve Bank Governor Michele Bullock faces a challenging task as inflation figures reveal a rise to 5.2% in August, exceeding the central bank’s 2-3% target range. The increase, driven by robust wages growth and rising energy and labour costs, indicates persistent inflationary pressures affecting various sectors, including services.

AUD and Bond Yields

Following the release of the consumer price index, the Australian Dollar (AUD) dipped below US64¢, settling at US63.9¢. This movement in currency value is reflective of the broader economic factors and inflationary pressures at play. Additionally, there was a slight slip in bond yields, with the 10-year yield at 4.3% and the two-year yield decreasing by 2 basis points to 4.03%. These shifts in currency and bond yields are indicative of market reactions to inflation data and have implications for international trade and investment.

Oil Market

Oil prices are on the rise, with West Texas Intermediate nearing $US91 a barrel, indicating a supply deficit. A 28% surge since June, attributed to supply curbs from OPEC+ leaders, has sparked discussions of $US100 a barrel crude. However, gains have plateaued recently, reflecting market uncertainties and varying factors influencing oil prices.