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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General

Annual inflation data was released last week showing inflation continued to ease in the March quarter, driven by lower oil prices, and is now at its lowest level in around three years. But the headline figure is fairly rubbery and readers should pay more attention to the core (or underlying) measures, which suggest the Reserve Bank could conceivably justify any decision it wants to on interest rates when it meets next month.

Over the last week, financial markets have unwound some of their expectations on future rate cuts as the less aggressive than expected April Board meeting statement was followed by a better-than-expected March labour force print – and some slight reinforcement from the March quarter CPI data. The terminal cash rate priced in by the market prior to the RBA meeting was just below 1.60%; this has now backed up to 1.85%.

Source: Rural Bank

 

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