28 Nov 2012

Inflation expectations ease

7:30 am on 28 November 2012

Inflation expectations have eased further, due to a slow and patchy domestic recovery.

The Reserve Bank's quarterly survey shows business managers forecast annual inflation to average 1.77% over the coming year.

That's its lowest level since 1999 and compares with 2% in the last survey in August.

The two-year inflation expectations, which the Reserve Bank pays particular attention to, edged down from 2.32 to 2.27%, the lowest level since the second quarter of 2009.

New Reserve Bank Governor Graeme Wheeler has agreed with the Government to keep inflation around the mid-point of the 1 to 3% target band.

Expectations about the pace of economic growth also slowed from 2.2% to 2.1% in the coming year, and remained steady at 2.3% over the next two years.