Import figures could trigger interest rate cuts

The Reserve Bank of Australia (RBA) is under increasing pressure to reduce interest rates when the board meet again in May.

Up until now, the central bank has been reluctant to make any readjustments in 2012, having made two successive changes towards the end of last year.

New import figures have added to the argument for lower interest rates, as the price of goods coming into the country are at their lowest for two decades.

The Australian Bureau of Statistics revealed that the overall import price index fell by 1.2 per cent in the first quarter of 2012.

Chief economist at Commonwealth Securities Craig James believes this adds further evidence that the RBA can get away with making the first rate cuts of the year, although next week's inflation figures will also be crucial.

"Even if the consumer price index is above market expectations, the plunge in prices of imported goods tells the Reserve Bank that future inflation will remain low," he commented.

Have a question about interest rates? Ask the money gurus at Mozo Answers.ADNFCR-1761-ID-801345245-ADNFCR