The way is open for home owners to have a win on Melbourne Cup day, with a cut in interest rates becoming more likely.
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Economists analysing the latest inflation figures believe the easing in price pressures gives the Reserve Bank room to move at its meeting on Tuesday.
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Inflation eased in the September quarter and is expected to drop further this year, because of the slowdown in the national economy.
The clamour for movement in rates stepped up immediately, with business saying the result reduced the barrier to an immediate cut.
The Australian Chamber of Commerce and Industry said subdued inflation reflected weak demand and a cut in rates would provide a much needed impetus to demand.
The decision on interest rates by the Reserve Bank next Tuesday will also take into account whether European nations have agreed to a plan to deal with their debt crisis.
The consumer price index, issued by the Australia Bureau of Statistics yesterday, shows a rise of 0.6 per cent for the September quarter, down from 0.9 in the June quarter, for an annual rate of 3.4 per cent.
This is down from 3.6 per cent in the year to June, but still above the bank's 2 to 3per cent target.
The result was in line with what most economists were expecting.
Electricity prices rose by 7.8 per cent in the quarter, while pharmaceuticals dropped by 5 per cent.
Price pressures were much lower on the highly watched measures of underlying inflation.
Prices in Canberra rose by 0.7 per cent in the quarter and the national capital recorded one of the largest rises in housing costs, at 2.1 per cent.
The bank's deputy governor Ric Battellino said this week the bank's board would be watching the inflation figures as it decides whether to cut interest rates.
Westpac chief economist Bill Evans said a slowdown in the economy in the December quarter should lower inflation even further.
CommSec chief economist Craig James reserved judgment about a rate cut until European leaders announced measures to deal with the region's debt crisis, expected today.
Chamber and industry director of economics Greg Evans said while the Reserve Bank might still need convincing of the need for a rate cut, the impact of continuing uncertainty in both Europe and in the United States made easing monetary policy now less risky.
Housing Industry Association senior economist Andrew Harvey said the inflation outcome gave the bank room to cut rates to ensure the economy could ride out any further global instability.