RBA gives emphasis to the third quarter inflation
Australia's major bank tells that coming data on inflation as well as employment will be critical for interest rates at its upcoming gathering meeting on November 1, thus opening the door to a probable easing.
A drop would shock markets, currently pricing in just a small likelihood of an easing this year or next because Australia's A$1.6 trillion economy is demonstrating a quarter century of growth without recession.
New governor Philip Lowe told that policy makers require guarding against the risk, which sluggish consumer prices would feed into ever lower hopes for inflation, thus causing an undesired downward spiral.
Next week's Q3 CPI is expected to be a crucial update. An underlying CPI of 0.3% or even lower will provoke a rate drop at the November gathering.
Consumer prices ascended 1%, while core inflation hit a record minimum of 1.5%, below the RBA's target band of 2-3%.
Traders sill assume that an easing is a distant probability.