Cliff Notes: Policy Perspectives from Across the Globe

Westpac’s weekly “Cliff Notes” reviews central-bank developments that are driving FX and rates. In Australia Q1 CPI surprised to the upside (1.4% q/q; 4.1% y/y; trimmed mean 0.8% q/q, 3.5% y/y), underpinning Westpac’s call for a 25bp RBA hike in May to 4.35% and two further hikes (June, August) to a 4.85% peak — a supportive backdrop for AUD. Offshore, the BoJ held at 0.75% (6-3 vote) but signalled further hikes as import-price risks rise; the Fed and BoC stayed on hold while the ECB and BoE left room for June tightening. A sharp Brent oil spike (peak ~USD126, now ~USD114) has revived upside inflation risks and could force more aggressive policy in some jurisdictions. Net market impact: hawkish Australian and global inflation cues tilt the near-term outlook toward tighter policy and a firmer AUD, but slowing growth and rising unemployment leave risks to the downside.