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22 Apr 2015
Inflation not the main game in Australia - ANZ
FXStreet (Bali) - According to ANZ Economists, today’s Australian inflation figures shouldn’t materially change the RBA’s moderate inflation outlook, adding that they still expect the Central Bank to cut the cash rate further in May.
Key Quotes
"At first glance today’s results shouldn’t materially change our or the RBA’s moderate inflation outlook, which is neither too weak or too strong to overly influence monetary policy deliberations at present."
"While slightly above market expectations, underlying inflation was in line with the RBA’s recent forecasts, and there is not enough in the detail to suggest a change in key inflation drivers – that is, low unit labour costs holding down non-tradables inflation and offsetting pass-through from the weaker currency. Subdued consumer demand conditions and strong competitive pressure at the retail level also appear to be holding down inflation outcomes."
"We retain the view that the RBA will cut the cash rate further in May on the basis of weak outlook for domestic demand (particularly non-mining business investment). This is a close call given uncertainty around the efficacy of rate cuts in the current environment of low yields and high levels of household debt. Beyond that, we expect the cash rate to remain on hold until 2017, although we expect the RBA to retain an easing bias for a considerable period."
Key Quotes
"At first glance today’s results shouldn’t materially change our or the RBA’s moderate inflation outlook, which is neither too weak or too strong to overly influence monetary policy deliberations at present."
"While slightly above market expectations, underlying inflation was in line with the RBA’s recent forecasts, and there is not enough in the detail to suggest a change in key inflation drivers – that is, low unit labour costs holding down non-tradables inflation and offsetting pass-through from the weaker currency. Subdued consumer demand conditions and strong competitive pressure at the retail level also appear to be holding down inflation outcomes."
"We retain the view that the RBA will cut the cash rate further in May on the basis of weak outlook for domestic demand (particularly non-mining business investment). This is a close call given uncertainty around the efficacy of rate cuts in the current environment of low yields and high levels of household debt. Beyond that, we expect the cash rate to remain on hold until 2017, although we expect the RBA to retain an easing bias for a considerable period."