It was surprisingly low readings for inflation in the first and second quarters that led directly to rate cuts in May and August, leaving the cash rate at an historic low of 1.5%. The median forecast from analysts polled by Reuters is for underlying inflation — which averages the three measures — to rise 0.4% in the third quarter. Yet he also said the central bank needed to guard against a further decline in inflation expectations, which could feed into wage and price setting behaviour. "In our view, 0.3% or less would trigger a rate cut at the November meeting," said Michael Blythe, chief economist at Commonwealth Bank. Interbank futures <0#YIB:> imply just a 14% chance of a November rate cut, and that despite a surprisingly soft report on employment released last week.

Source: The Edge Markets October 24, 2016 04:52 UTC