Inflation Provides RBA Scope to Keep Low Rates

Australia’s core inflation slowed last quarter as the removal of a carbon tax cut power bills, giving the central bank scope to keep record-low interest rates.

The trimmed mean gauge of prices rose 0.4 percent from the second quarter, below the median forecast of a 0.5 percent gain and less than a revised 0.7 percent increase three months earlier, government data released in Sydney showed today.

Historically slow wages growth and falling electricity prices provide flexibility for Reserve Bank of Australia Governor Glenn Stevens as he tries to reinvigorate domestic industries and encourage hiring. Policy makers have left rates at 2.5 percent for the past 14 months as they aim to steer a transition in the economy and extend 23 years of growth.

Bloomberg

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