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Australia Consumer Prices (Q3)

Ignore the larger-than-expected rise in headline CPI inflation in the third quarter, what really matters is that underlying inflation was weaker than the RBA expected. It probably wasn’t weak enough to prompt the Bank to cut interest rates from 1.5% at Tuesday’s policy meeting. But the data support our view that stubbornly low underlying inflation could mean that rates are cut to 1.0% next year.

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