Slowing Wholesale Costs Boost Australia Interest Rate-Cut Scope

Prices paid by Australian producers, one of two gauges of cost pressures in the economy released this week, decelerated for a third straight quarter, boosting scope for the central bank to lower borrowing costs next month. The producer price index advanced 0.3 percent in the October-to-December period from the prior quarter, when it gained 0.6 percent, the Bureau of Statistics said in Sydney today. Reserve Bank Governor Glenn Stevens cut interest rates last quarter at back-to-back meetings as Europe’s sovereign debt crisis clouds prospects for global growth. Australian government data on Jan. 25 is predicted by economists to show inflation slowed last quarter to the weakest pace since the height of the global financial crisis, increasing the chance of a third straight policy meeting of cuts. Today’s report “adds to the expectation that there’s going to be a soft inflation outcome,” said Annette Beacher. A Feb. 7 rate cut is “locked and loaded,” she said.