Economists tip RBA to deliver two more rate cuts as core inflation slows

ABC NEWS (Australia)

Underlying inflation has fallen clearing the way for the Reserve Bank rate to cut interest rates next month. It's the first time in more than three years, that the central bank's preferred method of inflation is within its target band.

Transcript

00:00Disability support pensioner Gail Deane has been priced out of many necessities.

00:07If I do buy an apple I'll cut it in half and have half today, half tomorrow.

00:12Things like meat, forget it.

00:14She'd like more help with the cost of living.

00:17When you hear politicians constantly saying,

00:20we understand people are doing it tough.

00:23Well, do they really?

00:25I dare one of them to live my life for a week with a disability and try and live off what I'm living off.

00:32Consumer prices rose 0.9% in the March quarter and 2.4% for the year.

00:38The RBA's preferred measure of underlying inflation is now within its target band.

00:44Over the 12 months food prices did accelerate by 3.2% driven by fruit, veg, meat and seafood.

00:52Rent hikes and insurance premium increases both eased but remain elevated,

00:57while building cost increases were restrained at 1.4%.

01:02And even though some state energy rebates are rolling off,

01:05electricity prices are still 11% lower than a year ago.

01:10Inflation has slowed. It doesn't mean that prices are actually falling.

01:14But there could soon be some relief for households and businesses.

01:19Underlying inflation is at its lowest level in more than three years.

01:23So financial markets and economists are forecasting a quarter of a percentage point cut

01:28to the official cash rate in May, with more to come.

01:32We see the cash rate ending at about 3.35%.

01:36So really only a 1% cut from peak to trough.

01:40Like many Australians, Gayle Dean will be keenly watching what the Reserve Bank decides

01:45when it next meets in May.

01:49So please put up a 2015 balance sheet and economy.

01:51So let's take a look at the amount of revenue,

01:53it's probably the biggest part of the åpulcle.

01:54So let's do this...

01:55So let's take a look at the same rate.

01:57It's probably what I saw from the Federal Reserve Bank.

01:59So let's take a look at the other aspect.

02:00So let's take a look at the other aspect.

02:02So let's go out the next slide.

02:03I hope you can see that the recession.

02:04So let's take a look at the top of this.

02:06We see where we are going to take a look

02:07and make some sleep in the mid-rangements,

02:08so let's take the same code.

02:10So let's take a look at the level of the dollar gap.

02:12So let's take a look at all the polarity.

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