Central banks on top
Just got our business PI renewal through this week, with the quoted premium coming back with a lazy 100 per cent increase.
Some of that was due to a higher turnover, but by no means all of it!
Yes, there's been plenty of services price inflation in Australia over recent times, even if much of it is in the rear-view mirror now.
Over recent days, though, we've seen headline inflation rates for August reported for the Eurozone at 2.2 per cent, for the UK at 2.2 per cent, and for Canada at just 2 per cent.
The UK figure statistics retained enough stickiness in services prices inflation to have the Bank of England likely keeping interest rates on hold this month, but the Bank of Canada could be delivering larger rate cuts on this evidence.
With the headline inflation at 2½ per cent in the US, Federal Reserve cut the funds rate today by a percentage point, with a couple more cuts priced in before the end of the year.
There's a giant mountain of debt maturing in the US imminently, and although the economy has held up pretty well there's a huge incentive to get interest rates down as soon as possible.
Plus, the rising unemployment rate is also now a worry, and the Fed's dot plot now points to 8 interest rate cuts from the peak through 2025, which is more aligned with market expectations.
Aus late to the party
As you can see in the above chart, Australia's journey with battling inflation back down has some way further to run.
That said, next week, partly thanks to government subsidies, the monthly inflation gauge is expected to be negative, taking the annual inflation reading down to 2.7 per cent, with further declines to come as fuel prices fall at the pump.
The Reserve Bank should reasonably be expected to draw attention to core inflation figures, while looking through the impact of energy bill relief.
Market pricing has Australia's cash rate target falling to around 3 per cent over the next 18 months, from 4.35 per cent today.
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