RBA should cut rates and not be fooled by trimmed mean inflation
The central bank should not ignore the fact that the actual inflation rate Australian consumers and businesses feel is now within the designated target range of 2-3 per cent.
As Reserve Bank board members return from their holiday break, they will confront a momentous decision – whether to reduce the cash rate for the first time in more than four years – at their February meeting.
Despite the private sector recording zero growth in the September quarter last year, the board decided against reducing the cash rate at its December meeting.
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Craig Emerson is managing director of Emerson Economics. He is a distinguished fellow at the ANU, director of the Australian APEC Study Centre at RMIT and adjunct professor at Victoria University’s College of Business.
