As we have been saying for some time now, we don’t expect the RBA to move on the official cash rate in the near term, based on the current economic conditions. So it should come as no surprise to any of our followers that at its meeting today, the RBA decided to leave the cash rate unchanged at 1.5%.
The latest inflation data for the March 2017 quarter saw the headline inflation hit by 0.5% over the quarter to an annualised rate of 2.1%. However, the underlying inflation — the measure most relied on by the RBA, as it strips out volatile factors — remained weak, edging up by only 1.8% over the year This is is still well below the RBA target band of 2-3% p.a.
The biggest item contributing to the modest rise in inflation data was a jump of almost 6% due to rising petrol prices over the quarter. Electricity charges (up 2.5%), hospital services (up 1.6%), and the price of owner-occupier homes (up 1%) also contributed to the inflation data. Offsetting the rises was significant drops in the cost of holiday travel (down 3.8%) and the price of fresh fruit (down 6.7%).
And in other news, ANZ has announced that its half-yearly profit had jumped 23% to $3.4 billion in the six months leading to the end of March. It posted the result, even though interest income slipped 2% due to a big focus on cost cutting over recent times, whereby the ANZ has let go up to 2,850 full-time staff. All eyes will now turn to the budget due to be delivered next week by Federal Treasurer Scott Morrison.
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