CFMEU - Mining and Energy Division
Low inflation completely clears path for RBA to cut rates
Today’s Consumer Price Index result, which shows inflation at historic lows, has placed a clear imperative on the Reserve Bank to cut rates and relieve pressure, the CFMEU said today.
Figures released today by the ABS show Australia's consumer price index rose 0.5 per cent in the second quarter of 2012 from the first quarter and rose 1.2 per cent from a year earlier. The numbers are even lower than most economist predictions.
CFMEU National Secretary Michael O’Connor said if there was any doubt at all left in the minds of RBA board members, it should be completely eradicated by today’s inflation numbers.
“The new question that should be asked around the Reserve Bank board table is no longer ‘Why cut rates?’ it’s ‘Why not cut rates?’” Mr O’Connor said today.
“The inflation genie is not just safe inside the bottle - we’ve buried the bottle.
“Inflation is now trending below the RBA’s target band of two to three per cent. At the same time we have whole sectors of the economy, like manufacturing, crying out for relief – how can this situation create anything other than an overwhelming case to cut rates?
“The Reserve Bank Act explicitly states that the RBA must ‘best contribute to… the maintenance of full employment in Australia’. Dropping rates would certainly assist the manufacturing sector hold on to Australian employees, so the imperative is obvious.
“Today’s low CPI numbers completely clear the path for the RBA to step in and relieve pressure. Doing so will help the many non-mining sectors of the Australian economy that are doing it tough under current conditions.
“On behalf of manufacturing, construction, retail and, indeed, Australian mortgage-holders, the CFMEU urges the RBA to take the hint from today’s numbers and drop rates next month.”
Michael O'Connor (CFMEU) 0418 550 831, Anil Lambert (Mountain Media) 0416 426 722
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