Australia central banker says inflation rate still too high

An acceleration in inflation over the third quarter led the RBA board to warn in December

A top Australian central banker said on Thursday (Jan 8) that a slowdown in consumer price inflation for November was “helpful”, but largely as expected and inflation was still too high.

In an interview with the Australian Broadcasting Corporation (ABC), Reserve Bank of Australia (RBA) deputy governor Andrew Hauser was asked about data released on Wednesday showing annual consumer price index (CPI) inflation slowed to 3.4 per cent in November, from 3.8 per cent the previous month.

“Most of those numbers were broadly in line with our expectations,” Hauser said, according to the ABC report.

“Inflation above 3 per cent – let’s be clear, it’s too high,” he added. “We wish to keep inflation between 2 and 3 per cent, that is currently above that.”

The central bank’s target is to keep inflation between 2 and 3 per cent over the long run, with a focus on 2.5 per cent. The RBA’s preferred measure of core inflation stood at 3.2 per cent in November, down slightly from 3.3 per cent the month before.

An acceleration in inflation over the third quarter led the RBA board to warn in December that interest rates might have to rise from the current 3.6 per cent if prices did not cool.

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Hauser on Thursday said that the RBA board would be looking at CPI figures for the whole fourth quarter due later this month to see how inflation was progressing.

However, the deputy governor said that the board would not adjust policy solely on that one report and would take the whole economy into account when judging the outlook for inflation. REUTERS

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