RBA: Inflation Outlook Revised Materially Higher; Headline CPI Seen Peaking At 4.5%, Staying Above 3% Until Late 2027

Inflation Risks Still Skewed Upwards; Domestic Capacity Pressures Stronger Than Assumed, Inflation Expectations Rising - Global Inflation Outlook Revised Higher, Partly Due To AI Boom - Trimmed Mean CPI Forecast: 3.6% Q4 2026, 3.5% Q2 2027, 2.9% Q4 2027, 2.6% Q4 2028 - Headline CPI Forecast: 4.5% Q4 2026, 3.7% Q2 2027, 2.7% Q4 2027, 2.4% Q4 2028 - Unemployment Forecast: 4.7% Q4 2026, 4.8% Q2 2027, 4.9% Q4 2027, 5.1% Q4 2028; NAIRU Estimate Raised To 4.75% - GDP Forecast: 1.6% Q4 2026, 1.6% Q2 2027, 1.3% Q4 2027, 1.5% Q4 2028 - Near-Term GDP Forecasts Raised On Data Centre CapEx; Longer-Term Outlook Lowered - Quarterly Average Cash Rate Assumptions: 4.7% Q4 2026, 4.9% Q2 2027, 4.8% Q4 2027 And Q4 2028 - Financial Conditions Judged Restrictive, Subject To Uncertainty; Cash Rate Path At Top End Of Neutral - House Prices And Lending Have Fallen; Business Lending Strong And Bank Credit Still Available - Unemployment Rose More Than Expected, Mainly Due To Stronger Labour Supply - AUD Trade-Weighted Index In Line With Long-Run Equilibrium Estimates, Still Up 5% This Year - Inflation Elevated Across Sectors, Rising For Market Services, Rents And Durables