Rate cut anticipation building

by Adam Smith24 Apr 2012

Soft inflation numbers are expected today, leaving the RBA scope for a rate cut when it meets next week.

ABS figures released yesterday show producer prices fell by 0.3% in the March quarter, coming in under economists' predictions. Now economists are expecting CPI numbers, due later today, to show benign inflation.

An AAP survey of 17 economists found a median forecast of a 0.7% quarterly rise for CPI, bringing yearly inflation to 2.1%. Underlying inflation is expected to track at 2.4%, well within the RBA's target range.

In the Bank's statement on monetary policy following its April meeting, RBA Governor Glenn Stevens hinted that today's inflation figures could be key to the Reserve's decision to further cut interest rates, saying the RBA "thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy".

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