Australian consumer prices rose at the slowest annual pace since 1999 last quarter while core inflation stayed at a record trough, leaving the door open to a cut in interest rates as early as next week. The headline CPI index rose just 1.0 percent in the year to June, while key measures of underlying inflation held at 1.5 percent, all well below the Reserve Bank of Australia's (RBA) target band of 2 to 3 percent.
The central bank had already cut rates to an all-time low of 1.75 percent in May following an alarmingly weak inflation report for the first quarter. Many analysts now looked for a repeat performance at the RBA's next meeting on August 2. Yields on three-year government paper stood at 1.56 percent, well under the overnight rate, while the local dollar was little changed at $0.7515. The Australian Bureau of Statistics reported its headline consumer price index (CPI) rose 0.4 percent last quarter, from the fist quarter when it fell 0.2 percent.