The RBA Now Has The Room It Needs To Cut Rates
SYDNEY, April 24 AAP – The Reserve Bank of Australia has the room it needs to cut interest rates in May following the release of weaker than expected inflation data, economists say. The consumer price index (CPI) rose 0.1 per cent in Australia in the March quarter, for an annual inflation rate of 1.6 per cent, down from 3.1 per cent previously, the Australian Bureau of Statistics said on Tuesday.
Economists’ forecasts for the headline CPI had centred on a rise of 0.7 per cent in the quarter, for an annual pace of 2.1 per cent, at the bottom end of the RBA’s target range of two to three per cent.
Seasonally adjusted CPI fell 0.2 per cent in the March quarter, and was up 1.5 per cent in the 12 months to March.
The trimmed mean CPI rose 0.3 per cent in the March quarter, for an annual growth rate of 2.2 per cent, data from the ABS showed.
The weighted median CPI rose 0.4 per cent in the March quarter, for an annual rise of 2.1 per cent.
Commonwealth Bank chief economist Michael Blythe said the weak inflation figure would allow the RBA to cut the cash rate from its current level of 4.25 per cent.
“A rate cut looks like a very high probability given the RBA itself put on these numbers,” he said.