- Underlying quarterly inflation came in at 0.8%, stronger than the 0.7% CBA had forecast.
- This was enough to get its economics team to move the RBA rate cut call back to February 2025.
- Notably, CBA's terminal cash rate call is 3.35%, up from 3.10% - implying one less rate cut than originally anticipated.
This all but snuffs out the prospect of a sneaky pre-Christmas cash rate cut in the Reserve Bank of Australia's final two board meetings for the year.
The Consumer Price Index data for the September quarter, released on Wednesday, showed a considerable slowing in inflation to 0.2%, well down on the 1% recorded in the June quarter.
However, for CommBank's economists, the 'tell' was quarterly underlying inflation coming in at 0.8%, while CBA was saying 0.7% was slow enough to justify the RBA cutting its key policy rate in December.
That 10 basis point-odd discrepancy was enough for the economics team to push that call back to February, with the RBA not meeting in January.
The annual rate slowed to 2.8% compared to a 3.8% rise in CPI inflation in the 12 months to June.
The fall was largely attributed to the federal government's energy rebate which effectively cut electricity costs for all Australian households, as well as additional state energy subsidies.
Overall, electricity prices plunged 17.3% in the September quarter and 15.8% over the past 12 months.
RBA's preferred inflation measure also drops
Trimmed mean CPI, which measures underlying inflation without volatile price changes, came in at 0.8%, steady with the June quarter, although slightly lower on a two-decimal place reading at 0.78%.
It saw the annual rate ease to 3.5% in the September quarter, down from 3.9% for the June quarter.
Although headline inflation at 2.8% is now within the RBA's much touted "target range" of 2-3%, governor Michele Bullock has made it clear the board will be looking for trimmed mean inflation to be "heading sustainably to within the target band" before the cash rate moves.
The next RBA board meeting will be on Monday and Tuesday next week, with a decision on the cash rate to be handed down on Melbourne Cup day.
Safe to say, most punters betting on a rate cut will get better odds at the track.
CBA's new cash rate outlook
CommBank says its December cash rate call depended on the September quarter trimmed mean figure coming in at 0.7% or less.
Overall, it said CPI data was roughly in line with market expectations, although the 2.8% headline figure was lower than the median forecast.
CBA analysts said the path of disinflation, or slowing inflation, has been a "bumpy ride" as observed in the swings in underlying quarterly inflation.
It now sees the cash rate remaining on hold at both the November and December RBA board meetings with a 25-basis point cut in the cash rate pencilled in for February.
It's also revised its outlook, now forecasting 100 basis points of easing over 2025 that will take the cash rate down to 3.35% by the end of next year.
That's up from the rate of 3.10% it had previously forecast.
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