Latest note from Macquarie Bank economist James McIntyre

  • Q1 CPI data "a shocker"
  • RBA 25bps rate cut now expected next week

"We had highlighted the 1Q16 CPI outcome as a potential last ditch catalyst that could result in the RBA delivering a surprise May rate cut. As a result of the exceptionally weak outcome, particularly for underlying inflation, we have reinstated our forecast for a May rate cut."

Macquarie only two weeks ago pushed their rate cut forecast out to August following strong jobs data.

Meanwhile CBA say they are sticking to their view that says the RBA will stay on hold next but that the decision will be a close call. JPM and Goldmans are looking for a 25bps cut next week.

AUDUSD 0.7632 near session lows after the awful inflation data earlier with Chinese iron ore futures also down 6%