Why interest rates are defying Australian economists' inflation delusion | Greg Jericho Read moreBut it has significantly lowered its inflation forecasts for the next few years. It had also previously forecast underlying inflation would rise to 2.5% by June 2019, but it now expects inflation will only be 2% by the end of 2019. The Reserve Bank traditionally does not consider lifting interest rates until inflation is sitting within its 2% to 3% target band. “Recall that in May 2016, when the bank was forced to lower its underlying inflation forecast to 1.5%, it immediately cut rates by 0.25%. “Keep in mind, wages growth is a lagging indicator, so by the time it arrives, everything else has usually picked up pace,” Bloxham said.

Source: The Guardian November 10, 2017 05:48 UTC