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Citi analysts said that core inflation in Australia in the second quarter will be 0.3%, and this will be enough to convince the Reserve Bank of Australia to cut its key interest rate by 25 basis points at the August meeting.
If inflation goes above this level, the lowering of the rates in August will be less likely, especially given the recent data that pointed to improvement in business sentiment and an increase in the number of jobs to full-time employment.
The ANZ also believe that the RBA will lower the key interest rate in August. "Core inflation in the second quarter is likely to remain low and the labor market has lost momentum in the current year, which could lead to a decrease in the key rate".
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