21 July 2016 at 1:00 GMT
Traders are betting Australia’s central bank will cut interest rates as early as next month as inflation sinks below its target. The futures market is pricing in a 58 percent chance the Reserve Bank of Australia will cut its cash rate 25 basis points at its August 2 meeting after a two-month pause. The odds are up from 48% a week ago. Consumer-price gains slowed to an annual 1.1% in the first quarter, according to the median forecast of economists surveyed by Bloomberg before the report July 27. Core inflation dipped below the RBA’s 2-3% target range for the first time this century in three months ended March 31. Policy makers, who meet a week after the CPI data is published, in May noted global disinflation trends compounding Australia’s historically low wage increases. The AUD rally, which saw a seven-week winning streak up until July 15, also adds to the case for a rate cut. The appreciating exchange rate could complicate the economy’s transition away from mining investment.
Read full article at Bloomberg