Rory Robertson, interest rate strategist, Macquarie:
''This won't stop the RBA from easing. Any inflation reading that came before the September market meltdown has been surpassed by events. History shows that recessions solve inflation problems, so much of the world is about to have their inflation problems solved, and pretty rapidly.
The big fall in commodity prices will also help cure headline inflation, while sub-par economic growth and rising unemployment will take care of core inflation.''
Adam Carr, senior economist, ICAP
''It's looking into the rear-view mirror. Inflation is most likely to moderate, probably quite sharply. Today's data has no policy implications because the RBA said it expects inflation to moderate in 2009.
I expect a 25 basis point rate cut in November. If you look at the breakdown of the CPI data, it's the usual suspects: rent, fuel, fruits and vegetables. Some of those components, including financial services and petrol, are clearly a function of the credit crisis. That is not going to go on in perpetuity.
Oil has already come off and we have seen some relief on food prices as well. We are already seeing inflation pressures ease.
It's just not evident in the data yet.''
David de Garis, senior economist, NAB
''It's not something that's necessarily going to change the short-term stance of monetary policy, but it's just another indication of the persistence of inflationary pressures.
We're still on track for another easing in November, most likely of 50 basis points. Possibly it could be a little less than that.
It's unlikely given the way the market's been settling down that it's going to be more than 50 this time. It could even be less than that.''
Joshua Williamson, senior strategist, TD Securities
''It's stronger than the market expected, but was in line with what the RBA was thinking, generally driven by higher food, financial and transportation prices. What this should do is probably get the market to start paring back a little its expectations for rate cuts before the end of the year.
They've been quite aggressive. In combination with the higher CPI, we know that money market rates have come down and we've got fiscal stimulus and an RBA governor that generally believes that the worst of the crisis is possibly behind us.
Possibly it shows that inflation still does matter, even though we're in this financial crisis. But for the market, monetary policy expectations might need to be just shaved back a little bit. We're still looking at 50 (basis points) for November, but maybe looking at 25 for December now, possibly even 25 for November.''
Helen Kevans, economist, JPMorgan
''The numbers are higher than expected but, in terms of outlook for monetary policy, we don't think this will change much. The market is still pricing in a 50 basis points cut from the RBA in November and that is in line with our forecast.''
Su-lin Ong, senior economist, RBC Capital Markets
''It looks broad based and elevated, but it's probably consistent with Reserve Bank of Australia governor Stevens' view. I suspect it marks the peak in inflation for this cycle, so for policy I don't think it's going to stop further rate cuts from the RBA.''
Reuters
