Stronger inflation has locked in February RBA hike expectations, supporting the AUD but leaving risks of further tightening alive. Summary:MUFG and CBA both say persistent inflation and tight labour conditions have strengthened the case for a February RBA rate hike. Australia’s latest CPI showed headline inflation rising to 3.8% y/y, while trimmed mean inflation lifted to 3.4%, reinforcing concerns about sticky price pressures. MUFG said the combination of elevated inflation and evidence of tightening labour market conditions will heighten the RBA’s concern about persistent inflation risks. For markets, the alignment of rising rate expectations, resilient growth signals and supportive commodity dynamics has helped underpin the Australian dollar.