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A mixed bag result on inflation, within target measures have all but ensured that rates will be on hold for the next meeting of the Reserve Bank. They are saying Interest Rates will not rise!
Why is this the case?

Here are the key factors:
1. Price of petrol has reduced, as the average family (according to the Daily Relegraph) is saving $22 a week at the bowser compared to six months ago. The average unleaded petrol prices in Australia has reached a low of $1.17 per litre in December 2014, this is the lowest recorded average since Feb 2009 (Source: SMH 28/1/15)

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2. Inflation (or CPI Index) rose 0.2 % to 1.7% – “Core inflation remains fairly anchored” JP Morgan Economist Tom Kennedy said. This means inflation is in a good state and as some commentators have said flat. This is good

3. Prices for food particularly fruit (down by 2.7%) and vegetables (down 1.7%) have slightly lowered, probably due to less transport costs (petrol prices reducing as they have)

4. A Weaker Australian Dollar – could suggest signs of a slowdown in the Australian Economy

Some people in the papers have said that they are looking more at the unemployment figures and retail activity as a means for evaluating rates changes in the next few months.

Hope this information is informative for you!!

Cheers,

James

 

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