In their latest policy decision here, the RBA continues to put out the narrative that they are not ruling anything in or out. It speaks to the uncertainty on the inflation outlook, in which they also argued that the process would not be smooth.

But whatever the case is, we are continuing to see price pressures hold up in Australia. This may only be the monthly inflation numbers but they still provide some idea of how things are playing out. The quarterly report will still be the more scrutinised one but it is hard to ignore the readings from today.

The main takeaway is that inflation continues to sit well above the RBA’s target band of 2% to 3%.

And it looks like price pressures are becoming more resistant and stubborn in the last few months. So, where does that leave the RBA?

Well, a rate hike is arguably back on the cards now especially after Bullock said that they did discuss whether to hike rates last week.

And the market odds are clearly reflecting that as well. August is going to be a tight call, with the odds of the RBA leaving the cash rate unchanged now falling to ~67%. It was ~90% before the inflation data earlier. Meanwhile, September is starting to look like a coin flip with the odds of a rate hike now climbing to ~40%. It was sitting at ~12% coming into today.

The Q2 CPI report on 31 July is going to be a make or break release for the RBA before they meet on 6 August. Mark that down in your calendars.