Inflation is staying well below the Reserve Bank's two to three per cent target, keeping the door open for more interest rate cuts.
Consumer prices rose 0.4 per cent in March, following a flat result in February, according to the TD Securities/Melbourne Institute monthly inflation gauge.
The annual rate of inflation was 1.5 per cent, and in January was 1.3 per cent.
TD head of Asia Pacific research Annette Beacher said the RBA was in an uncomfortable position because the housing sector was staying strong but the rest of the economy was sluggish and price growth was staying low.
"While low inflation certainly allows the RBA to cut the cash rate further, we pencil in only one more cash rate reduction to two per cent in May," she said.
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