By Wayne Cole
SYDNEY (Reuters) -Australia’s top central banker said a pickup in consumer spending and higher readings on some parts of inflation had given policymakers pause to consider whether further interest rate cuts were needed.
Speaking at a Nomura event in Washington on Wednesday local time, Reserve Bank of Australia Governor Michele Bullock said recent readings on home building costs and market services suggested a risk core inflation had been higher than expected in the third quarter.
Combined with firmer consumption data, this had given the RBA board time to judge “whether there was further easing to come or not,” Bullock said.
Bullock said the RBA board judged that current rates were marginally restrictive and there were signs financial conditions had loosened, with credit and house prices rising.
The RBA held cash rates steady at 3.60% in September, having cut three times so far this year, saying it needed more data to be sure inflation was slowing as desired.
Core inflation had fallen to 2.7% in the second quarter, back in the RBA’s target range of 2% to 3%, but recent monthly data pointed to a risk it had not eased further in the third quarter.
Figures for the third quarter are due at the end of this month, a week before the central bank’s next policy meeting on November 4.
Markets imply around a 45% chance the RBA will cut rates by a quarter point in November, with around a 70% probability of an easing in December instead.
(Reporting by Wayne Cole; Editing by Chris Reese and Jamie Freed)
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