It looks as though interest rate cuts from the Reserve Bank are done for the year after inflation rose to 1.7 per cent in the September quarter.
The RBA’s target range for inflation is currently between 2-3 per cent but it has been stubbornly resisting movement for months.
CommSec economist Craig James says a Melbourne Cup Day move on rates now looks done and dusted.
“The language from the policymakers suggest that they are very reluctant rate-cutters from here,” he told Australian Financial Review.
“Rates are low enough and the rate cuts have actually been having the opposite to the desired effect – spooking Aussie consumers.”
RBA governor Philip Lowe said inflation and unemployment were the two biggest factors deciding whether there would be any further rate cuts.
“It is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target.”
Dr Lowe says he is confident the economy is going through a gentle turning point.
Retail sales figures due out next week will give a clearer picture of how much difference the recent three rate cuts have been but the official cash rate looks set to stay at 0.75 per cent for the rest of 2019.