An article in the Australian Financial Review (gated) says that the potential for inflation created by more expensive imports in the wake of the falling Australian dollar may restrict the Reserve Bank’s ability to cut rates further:
- ANZ are saying the forces driving the dollar lower appear to be more permanent than previous drivers of ‘temporary’ falls in AUD
- Bank of America Merrill Lynch say that non-tradeables inflation has remained persistently high and if tradeables inflation starts to rise the RBA “could be hamstrung to a certain extent”.
