Inflation numbers get interesting for the RBA this quarter

Tuesday, 21 January 2014  Features

​"An unexpectedly high figure in might see the end of the RBA rate cutting spree, however a lower than expected figure could boost the chances of another cash rate cut when the RBA board meets in February."

Hide caption

"Tomorrow's inflation numbers will give us an indication as to whether the RBA will cut rates - or indeed raise them," said Glen​n Otto from the UNSW's Australian School of Business.

"An unexpectedly high figure in might see the end of the RBA rate cutting spree, however a lower than expected figure could boost the chances of another cash rate cut when the RBA board meets in February."

Associate Professor Glenn Otto has made a study of the Australian macro-economic situation, and keeps a close eye on the inflation rate. He is available for interview when the ABS releases the consumer price index (CPI), the key measure of inflation, for the December quarter, on Wednesday 22 January at 11.30am.

"The ABS' CPI figure is crucial for the RBA. We're expecting inflation to hover around 0.5 per cent - or 2.5per cent annually - right in the middle of the RBA's range, but it could swing either way. Even if it comes in on target it may not stop the Reserve Bank of Australia from cutting the cash rate but the falling Australian dollar might; it's fallen from a high of US$1.10 last year, to only 87cents now. That's some fall, and cutting interest rates might make it fall further, overshooting a comfortable position."

Inflation came in higher than expected in the September quarter at 1.2 per cent. Economists had forecast a quarterly rise of 0.8 per cent.

For further comment call Glenn Otto on 02 9385 3332, or Email g.otto@unsw.edu.au.

Media contact:
Julian Lorkin: 02 9385 9887

inflation-numbers-get-interesting-for-the-rba-this-quarter