The June quarter inflation figures fail to give a clear indication of whether there will be an interest rate cut on August 6.
The consumer price index for the 12 months to June was 2.4 per cent, in the lower half of the Reserve Bank of Australia's two to three per cent target range.
The number was slightly below the 2.5 per cent recorded in the previous quarter.
When inflation figures are released by the Australian Bureau of Statistics this close to the RBA's next board meeting, they are usually the last piece in the puzzle for those forecasting what the central bank will do.
However, JP Morgan Australia chief economist Stephen Walters said the data was "a 1-1 draw for the RBA".
He is sticking with his forecast for the cash rate to stay unchanged at a record low of 2.75 per cent.
"The lower Australian dollar is doing some of the heavy lifting for the RBA and, as last week's board minutes pointed out, there already is a substantial amount of easing in the pipeline," Mr Walters said.
"There is evidence that the earlier rate cuts are starting to work, particularly in the housing market, and RBA officials are confident they will get more traction from here."
The RBA uses the cash rate to keep inflation under control, and cuts the rate to stimulate growth.
Mr Walters believes the sluggish non-mining parts of the economy will make more rate cuts inevitable, and forecasts cuts by the RBA in November 2013 and February 2014.
But HSBC chief economist Paul Bloxham said the lower inflation figures would allow the RBA to cut the cash rate in two weeks time.
"Combine that with the fact that the Aussie dollar has lifted in the past week or so, sentiment remains weak and the unemployment rate has edged up, means they will probably cut the rate," he said.
CommSec economist Savanth Sebastian said the lower than expected inflation reading would not increase the chance of an RBA rate cut.
"There is still one potentially for August, but I don't think it's a certainty by any means," he said.
But it does mean that the cash rate can stay lower over the near term, he said.
"We've probably seen the low point in inflation," Mr Sebastian said.
"While it's not going to breach the top of the Reserve Bank's target of three per cent, it certainly makes it a little bit more complicated to provide substantial rate cuts."
The RBA last cut the cash rate in May, by a quarter of a percentage point, after reducing it three times in 2012.
Share
