Westpac Keeps August RBA Hike Call Alive After Mixed May CPI

Westpac’s latest note maintains a patient but hawkish RBA outlook, still seeing an August rate hike as likely despite softer headline inflation. The May CPI print showed headline inflation easing to 4.0% y/y versus 4.3% expected, while trimmed-mean core rose to 3.6%, above consensus, confirming sticky housing and rent pressures flagged in previews. Employment rebounded 40.3k with unemployment falling to 4.4%, though trend data point to gradual labor-market softening. Oil-price volatility and firmer US data add further uncertainty, keeping markets focused on the RBA’s tolerance for above-target core inflation.