TD Securities’ Inflation estimate hinted that Australian prices grew at an annual pace of 1.3% in September, the lowest since records began over six years ago. This puts inflation clearly below the central bank’s target rate and suggests that Reserve Bank of Australia Governor Glenn Stevens and company will keep benchmark interest rates on hold when they announce monetary policy next week. Stevens, who gave testimony to the Senate Committee earlier this week, said that while borrowing costs are “unusually low” and will need to go back to normal levels, inflation targeting will guide the timing of adjustment to “more normal levels”.
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