Good news for borrowers as both key inflation measures fall

[Pelican Press 0]

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Good news for borrowers as both key inflation measures fall

Power rebates have helped push headline inflation down to 2.7 per cent in the 12 months to August while the Reserve Bank’s preferred measure also headed south.

Underlying inflation fell to be 3.4 per cent, according to the *********** Bureau of Statistics.

That figure has dropped significantly over the past two months — running at 4.1 per cent in June and then 3.8 per cent for July.

It’s the number in focus for the RBA.

The latest data comes just one day after the Reserve Bank held interest rates at 4.35 per cent — as it seeks to get inflation back to target for good.

Governor Michele Bullock on Tuesday told borrowers a cut this year was not likely after a meeting in which the RBA board did not consider raising interest rates.

Yet money markets predict an almost one-in-four chance rates will drop at the central bank’s next meeting, in November.

Westpac’s economists said on Wednesday morning that markets had taken a dovish signal from the RBA yesterday, meaning they think the bank is more likely to ease.

“That is despite clear guidance that the Board still does not rate the prospect of a near-term rate cut, Westpac said.

“Markets are now fully pricing in four rate cuts through to the end of next year, in line with Westpac’s view.”

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