RBA Cuts 2016 Underlying Inflation Forecast

The Reserve Bank of Australia (RBA) has revised its inflation forecast down to 1-2%, a significant drop from the previous 2-3% range. This adjustment follows a deflationary Consumer Price Index (CPI) report, prompting the RBA to cut the cash rate to 1.75%. The statement suggests that these measures aim to boost economic growth, although GDP and unemployment forecasts remain stable. The Australian dollar fell by nearly half a percent in response to the announcement, indicating market expectations of further monetary easing. Historically, the RBA tends to implement multiple rate cuts, and the current statement aligns with this pattern.

What was the previous inflation forecast range before the RBA revised it?

• 4% to 5%

• 3% to 4%

• 1% to 2%

• 2% to 3%

What action did the RBA take following the deflationary CPI print?

• Increased the cash rate

• Decreased the cash rate

• Maintained the cash rate

• Abolished the cash rate

How did the Australian dollar react to the RBA's statement?

• It rose by one percent

• It rose by half a percent

• It fell by almost half a percent

• It remained stable

What does the market expect following the RBA's recent statement?

• No further changes

• More rate hikes

• More rate cuts

• Stability in the cash rate

What is the RBA's usual approach to rate cuts based on historical patterns?

• One-time cut

• Multiple cuts

• No cuts

• Rate hikes