The RBA is unsure of the degree of its restrictiveness and if it’s not “mildly restrictive” there could be “implications” for policy as the economy may be at trend growth, according to comments from Deputy Governor Hauser this week. In November, the RBA assumed that around two-thirds of the Q3 underlying inflation increase was temporary but around one-third could be persistent. It was not just trimmed mean inflation that rose but other measures of core price pressures. Our Q3 PCA measure of underlying inflation rose 0.2pp to 2.8% but is still within the band.
Australia underlying inflation y/y %

Source: MNI - Market News/ABS/LSEG
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| Date | Time | Country | Event |
| 13-Oct | --- | EU | ECB Lagarde and Cipollone at IMF/World Bank Meetings |
| 14-Oct | 0700 | DE | Germany CPI (f) |
| 14-Oct | 0850 | EU | ECB Cipollone Speech on Digital Euro |
| 14-Oct | 1000 | DE | ZEW Current Expectations Index |
| 14-Oct | --- | EU | ECB Lagarde and Cipollone at G20 Meeting |
| 15-Oct | 0745 | FR | HICP (f) |
| 15-Oct | 0800 | ES | HICP (f) |
| 15-Oct | 0840 | EU | ECB de Guindos at Resolution Mechanism Conference |
| 15-Oct | 1000 | EU | EZ Industrial Production |
| 15-Oct | 1900 | EU | ECB de Guindos at Alantra Anniversary Event |
| 16-Oct | 0900 | IT | HICP (f) |
| 16-Oct | 1000 | EU | Trade Balance |
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| 16-Oct | 1645 | EU | ECB Lane in Policy Panel at IIF Annual Meeting |
| 16-Oct | 1700 | EU | ECB Lagarde in IMF Policy Debate |
| 17-Oct | 1000 | EU | EZ HICP Final |
| 18-Oct | 1230 | EU | ECB Cipollone Speech at Euro50Group Meeting |
| 18-Oct | 1400 | EU | ECB Lagarde in Economic Outlook Panel at G30 |
RBA Governor Bullock at the September 30 press conference and Kansas City Fed President Schmid (FOMC 2025 voter) last week commented on higher services inflation. Given that it reflects domestically-driven factors especially labour costs, as Bullock said, it is a key variable for central banks. They are also monitoring how it is behaving overseas and Bullock noted that it has been sticky and so the RBA needs to be careful. Q3 to date rose in the US and stabilised in the UK and Australia.
OECD services CPI y/y%

EURUSD is trading closer to its recent lows. A short-term corrective bear cycle remains intact. Last week’s sell-off resulted in a breach of the 50-day EMA and support at 1.1646, the Sep 25 low, exposing 1.1516, a Fibonacci retracement. Note that MA studies are in a bull-mode position. This continues to highlight a dominant medium-term uptrend. Initial firm resistance is 1.1779, the Oct 1 high. A break of this level would signal a bull reversal.