Reserve Bank interest rates: Core inflation closes in on central bank’s target and now at three-year low

[Pelican Press 0]

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Reserve Bank interest rates: Core inflation closes in on central bank’s target and now at three-year low

Hopes for a Reserve Bank interest rate cut within months have received a boost after core inflation dropped to its slowest pace in three years.

The core measure — preferred by the RBA because it strips out volatility including power rebates — ran at 3.2 per cent for the year to December, according to the latest data from the *********** Bureau of Statistics released on Wednesday.

That’s down from 3.5 per cent in the year to September.

Wednesday’s numbers will be the last key data point released before the Reserve Bank meets next month. They might also be the last full inflation read out before the Federal election, depending on when Prime Minister Anthony Albanese pulls the trigger.

Economists had tipped the core measure would run at 3.3 per cent through 2024.

Plenty of commentators had argued a result lower than that would be enough for the RBA to finally start reducing interest rates.

But others have warned the booming jobs market risked sending prices higher again and would be a handbrake for the RBA.

Betashares chief economist David Bassanese said the latest figures would be “make or break” for the central bank’s next meeting on February 12 and 13..

Markets overnight had priced in an 84 per cent chance of a rate cut at that meeting.

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