Overall inflation high but trimmed mean a touch high
Australian Herald-Sun economic commentator Terry McCrann is out with his latest following the Q2 CPI data.
McCrann argues the data doesn't force the RBA to do anything but gives it full flexibility to respond as circumstances change.
"If the RBA wanted to cut rates, if it felt both that the economy was too weak and that lower rates would help, these numbers give it 'permission,'" he writes.
But he notes the speech from Gov Stevens later in the day and how he said the economy might have to tolerate lower growth. He also said the central bank must consider the long-term risks of lower rates.
"Simply that in meeting the challenge of securing growth in the near term, the stability of future economic performance can't be dismissed as a consideration," Stevens said. "And it is increasingly clear to people that the kind of sustained growth in mind here won't be the result of the manipulation of interest rates or year-to-year government fiscal settings. Demand management policies play an important role, but they have their limitations."
The RBA is currently working on its next round of forecasts and the latest numbers show they'll probably be tweaked, not overhauled. That means the RBA is unlikely to cut, McCrann says.
(to read the article behind the paywall, do a search for 'Economy steady as she goes')