RBA unlikely to cut interest rates despite inflation at lowest level in three years | The Business

Australia's inflation rate is at its lowest level since before price shocks began in 2021, at 2.1 per cent in the year to October. The data shows there are still strong prices rises in some areas like food, and other items like electricity bills are being pushed lower by subsidies. Economists say the data won't be a big consideration for the RBA when it meets again on December 9-10 to discuss interest rates. The measure of inflation that the Reserve Bank of Australia most closely watches when it sets interest rates rose in October to 3.5 per cent annually. That is because this "trimmed mean" figure compiled by the ABS excluded the large disinflationary effect of falling fuel prices and electricity subsidies that brought down power bills. Electricity bills were down by more than a third in October, compared to one year previously, thanks mostly to rebates brought in by the federal government and topped up by some states. Meanwhile, fruit and vegetables went up 8.5 per cent in price over the year to October. The monthly figures do not capture everything that ends up being included in the traditional quarterly figures, causing economists to be careful about how much should be extrapolated from them. The RBA started rising interest rates from a historic low of 0.1 per cent in May 2022, to cool down the economy and try to bring down soaring inflation. The cash rate is now at 4.35 per cent, its highest level in around a decade. The RBA says it needs to be confident that "trimmed mean" inflation will settle between 2 and 3 per cent and remain there before it starts cutting interest rates, with that measure rising slightly in October to sit at 3.5 per cent.
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