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Weak inflation report: the case for an interest rate cut

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Australia’s Reserve Bank governor, Philip Lowe, has presided over 28 meetings of the central bank’s board since taking the helm in 2016.

On each occasion, the consensus has been to leave interest rates on ice.

The Reserve Bank will consider a rate cut next week. Credit:Louie Douvis

Next month could be different.

Minutes from this month’s board meeting, released last week, revealed Lowe and his board explicitly discussed the case for an interest rate cut.

They concluded that, in a scenario “where inflation did not move any higher and unemployment trended up”, an interest rate cut would be “appropriate”.

Wednesday’s unquestionably weak reading on inflation certainly satisfies the first part of that equation; although the second part – an uptick........

© The Age