RBA preview: Will below target inflation prompt a rate cut? – ANZ

By FXStreet Felicity Emmett, Head of Australian Economics at ANZ, suggests that the Australia’s weak Q1 CPI report has prompted speculation of a cut at this week’s RBA Board meeting.

Key Quotes

“While inflation is likely to remain outside the Bank’s 2-3% target band for some time, we think the RBA will leave rates unchanged given the current robust tone to economic activity and labour market data.

The Bank has consistently characterised low inflation as providing scope to ease policy to support demand if necessary. At present, given strong business conditions and falling unemployment, demand does not look in need of further stimulus, even though the Bank may be missing its inflation target.

Moreover, given the global pressures on inflation it is unclear that a lower RBA cash rate will achieve higher inflation.”
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Source:: FX Street