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Australian Rate Cuts Back on Table as Disinflation Risk Emerges

  • Headline CPI in deflation, annual core inflation at record low
  • Currency dropped 2% Wednesday as RBA rate-cut odds increased
Updated on

Australia could resume cutting interest rates following a one-year hiatus as the threat of persistent weak inflation that’s engulfed developed-world counterparts shows signs of emerging Down Under.

The weakest annual consumer-price gain in the domestic economy in 17 years, seen in the non-tradables sector which isn’t prone to one-off swings, suggests the Reserve Bank of Australia will struggle to return inflation to target quickly. Government data Wednesday showed the lowest core inflation reading on record in the first three months of the year.