The RBA’s stated objective is to achieve an inflation rate of between 2% and 3%, “on average, over time.” Since the GFC, Australia’s inflation rate has been trending lower and lower and it has been below the RBA’s target band for some years now. Despite the RBA’s desire for a higher inflation rate, its attempts to accelerate inflation through record-low interest rates have failed so far. The latest unofficial measurement of consumer inflation indicates nothing has changed.
The Inflation Gauge index remained unchanged in August after a 0.3% increase in July and a flat result in June. On an annual basis, the index increased by 1.7%, slowing from July’s comparable rate of 1.8%.
Local markets ignored lower US treasury yields from overnight trading and Commonwealth bond yields increased fairly evenly across the curve, although ANZ’s Job Ads survey probably played a part. By the end of the day, yields on 3-year ACGBs had added 2bps to 0.69% while 10-year and 20-year yields each gained 3bps to 0.92% and 1.32% respectively.