Article by ForexTime
The Australian dollar tumbled after inflation in Australia came in lower than forecast according to data released on Wednesday. This poses little hurdle to Australia’s central bank should it choose to ease monetary policy again, but the softer figure for the September quarter has caught markets off-guard.
The headline consumer price index rose 0.5 per cent in the September quarter from a 0.7 per cent rise in the three months to June 30. That was below expectations of 0.7 per cent.
From a year earlier, prices rose 1.5 per cent, steady from a 1.5 per cent pace in the June quarter, but again softer than economists’ expectations for a 1.7 per cent rise.
On the Reserve Bank of Australia’s preferred measure – the trimmed mean – inflation rose 0.3 per cent in the September quarter, slowing from a 0.6 per cent pace in the June quarter and below expectations of 0.5 per cent.
From a year earlier, prices climbed 2.1 per cent, slowing from the 2.2 per cent rate in the June quarter. Economists had expected a pace of 2.4 per cent.
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This keeps things right down the bottom of the RBA’s inflation target range of between 2 per cent and 3 per cent. In fact, this 2.1 per cent result is the slowest pace of inflation since the June quarter of 2012.
The CPI is one of the key inputs for RBA monetary policy. Ahead of the release, National Australia Bank economists noted the state of other economic indicators mean the current rate of inflation is unlikely to meaningfully outlook the outlook for domestic interest rates.
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