Inflation under control, no excuse not to drop rates tomorrow
TD figures released today, which show Australia’s inflation rates at record lows and tracking well under the Reserve Bank’s inflation target band, confirm that the RBA should cut interest rates tomorrow and relieve pressure on sectors of the economy doing it tough, the CFMEU said.
The TD Securities-Melbourne Institute Monthly Inflation Gauge decreased by 0.2 per cent in June, following a flat result in May.
TD now forecasts official headline inflation to be just 1.4 per cent higher than a year ago and to increase by only 0.7 per cent in the first quarter of this new financial year. This is the lowest annual outcome since the September-quarter in 2009.
CFMEU National Secretary Michael O'Connor said with inflation so evidently under control, the RBA had a responsibility to cut interest rates and relieve pressure on parts of the Australian economy that were struggling, like manufacturing.
“We have now entered an ultra-benign period of inflation and that means the Reserve Bank has a duty to start cutting rates and relieving pressure,” Mr O’Connor said.
“If inflation was looming as any sort of risk, you might be able to understand the RBA’s timidity in cutting rates. But today’s figures show once again that this is simply not a threat in the current environment.
“With inflation so low, the RBA actually has a duty to cut rates and relieve pressure on manufacturing, retail, small business and ordinary mortgage holders across the country.
“The RBA Charter makes it clear that the Reserve Bank has a responsibility to strive toward full employment. Dropping rates tomorrow would be a huge help in that department.
“The Federal Government’s budget was tight, inflation is at record lows - it’s time to drop rates.
“Although super profits in the mining sector are dragging up our national economic averages, we should not lose sight of the fact that crucial areas – like manufacturing – are continuing to do it very tough and desperately need all the relief they can get.”
Michael O'Connor (CFMEU) 0418 550 831 / Anil Lambert (Mountain Media) 0416 426 722
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