Australia’s annual inflation has moved back into the central bank’s target range for the first time in more than two years, data showed yesterday, all but ruling out more interest rate cuts.
Consumer prices in the March quarter rose 0.5 percent from the previous quarter and 2.1 percent from the same period last year, the Australian Bureau of Statistics said.
This was up from 1.5 percent in October to December, but slightly below forecast.
The reading is within the Reserve Bank of Australia’s (RBA) 2 to 3 percent target band for the first time since the September quarter of 2014, boosted by price increases for oil and electricity, which was partly offset by a drop in the cost of fruit.
Underlying inflation, which smooths out volatile price swings, was at 1.8 percent.
The Australian dollar slid to US$0.7509, from US$0.7554, after the figures came out.
Analysts said the data reduced any likelihood of more cuts to interest rates, which are already at record lows, as the RBA juggles a booming property market with mixed economic data.
“The rise in underlying inflation in the first quarter, coupled with the RBA’s financial stability concerns, dramatically reduces the chances of any further interest rate cuts,” Capital Economics chief Australia economist Paul Dales said.
“That said, price pressures and economic growth are not strong enough to warrant interest-rate hikes. Interest rates are unlikely to rise above 1.5 percent this year or next year,” he said.
AMP Capital chief economist Shane Oliver agreed.
“With inflation moving in the right direction and given the RBA’s increased emphasis on an inflated Sydney and Melbourne housing market and rising household debt, the RBA is unlikely to make any adjustments to interest rates any time soon,” he said “We expect it to keep the cash rate at 1.5 percent for the next year at least.”
The RBA slashed rates 300 basis points between November 2011 and August last year to support non-resources industries, as the economy transitions out of a mining investment boom. It has remained on hold since then.
Its board is set to meet on Tuesday.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
Nano-X Imaging Ltd, a start-up founded by Israeli investor Ran Poliakine, is joining forces with South Korean chipmaker SK Hynix Inc to build a machine that could disrupt a century-old X-ray industry. Valued at about US$2 billion after listing on the NASDAQ last month, Nano-X is seeking to transform a multibillion-dollar industry that has essentially relied on the same technology since Nobel Prize in Physics winner Wilhelm Roentgen discovered X-rays in the late 19th century. Nano-X’s device uses semiconductors instead of metal filaments to generate X-rays. The backing of SK Hynix, the world’s second-largest maker of memory chips, is a boost for
Continental AG, which makes control units for Daimler AG cars, cannot pursue antitrust claims against a group of patent owners, including Qualcomm Inc, which are seeking royalties on telecommunications technology, a federal judge in Texas ruled. Avanci LLC, a licensing pool formed by Qualcomm, Nokia Oyj, Sharp Corp and other owners of patents on technology standards, is not breaching antitrust laws when it negotiates license agreements with automakers rather than the component makers, Barbara Lynn, chief district judge for the Northern District of Texas, said in dismissing the suit in a decision posted on Friday. The licensing group charges US$15 per vehicle
Sony Corp has cut its estimated Play Station 5 (PS5) production for this fiscal year by 4 million units, down to about 11 million, following production issues with its custom-designed system-on-chip (SOC) for the new console, people familiar with the matter said. The Tokyo-based electronics giant in July boosted orders with suppliers in anticipation of heightened demand for gaming in the holiday season and beyond, as people spend more time at home due to the COVID-19 pandemic. However, the company has come up against manufacturing issues, such as production yields as low as 50 percent for its SOC, which have cut into