RBA: MNI RBA Review-Feb 2026: Further Tightening Likely Needed
EXECUTIVE SUMMARY:
- The RBA raised the cash rate to 3.85%, as expected by the sell-side consensus and which was largely priced by the market (around 75% priced in per OIS markets prior to the decision). The decision was unanimous by the board. The risks appear skewed towards further action to ensure that inflation moves sustainably back into the target band of 2-3%.
- RBA-dated OIS pricing is firmer again today across meetings, extending yesterday’s post-RBA decision sell-off. That leaves RBA-dated OIS showing tightening across all meetings, with the probability of a 25bp hike rising from 17% for March to 105% by June and 172% by December 2026.
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AUSTRALIA: November CPI This Week’s Focus As Market Has Hikes Priced In
The focus of this week will be Wednesday’s November CPI, which is the new complete monthly series. While the quarterly data on 28 January will be the decisive input into the 3 February RBA decision, the new monthly headline and services have a very close fit with the previous monthly CPI series. However, the new trimmed mean will need some time for not only the seasonal adjustment factors to emerge but for the trend to emerge as there is also very limited history.
- The new trimmed mean CPI appears less volatile than the incomplete series but printed 0.7pp higher at 2.8% y/y in June 2025, which was the recent trough. Q2 was at 2.7% y/y overall.
- Bloomberg consensus is forecasting trimmed mean to be stable at 3.3% in November, which would be at or above the top of the RBA’s 2-3% band for the fifth consecutive month. Headline is expected to moderate 0.2pp to 3.6% but this series continues to be distorted by previous government electricity rebates.
Australia CPI trimmed mean y/y% - new vs old monthly series
Source: MNI - Market News/ABS
- Building approvals for November are also out on Wednesday and are projected to rise 2.0% m/m after falling 6.4% m/m. The data is particularly volatile due to the multi-dwelling component.
- Thursday sees November trade data with the merchandise surplus forecast to widen slightly to $5.0bn from $4.4bn.
- The final December S&P composite/services PMIs are released on Tuesday. The preliminary readings showed activity remaining positive but slowing from November and Q4 growth softer than Q3.
CHINA PRESS: A-shares Seen To Rise Early This Year
China’s A-share market performance will be supported by the restructuring of the international order and the country's industrial innovation, potentially with an initial rise followed by stabilisation, Securities Times reported citing Li Qiusuo, chief domestic strategy analyst at China International Capital Corporation (CICC). A-shares are expected to see a sustained rise in a stable external environment till the end of the U.S. midterm elections with the implementation of a China-U.S. trade deal, but external disturbances may increase sharply after the election, said Qiu Xiang, chief A-share strategist at CITIC Securities.
CHINA PRESS: New Year Holiday Saw 142 Million Domestic Trips
China saw nearly 600 million passenger trips during the New Year’s Day holiday, with 142 million people travelling domestically and generating revenue of CNY84.79 billion, the 21st Century Business Herald reported, citing official data. Catering consumption rose 2.8% y/y, while average daily foot traffic and turnover at 78 key business districts nationwide increased by 5.9% and 4.9%, compared with the same period last year. Sales of health-related and smart wearable devices rose by more than 20% and 15%.
