Inflation takes a step down but we caution about getting too excited about it

The Monthly CPI came in 2.1% in the year to October, at the bottom of the RBA’s 2 to 3 per cent target band. So why is the RBA not cutting interest rates? To understand why, it is not just about the special factors that are driving the CPI down, but also the construction of the Monthly CPI and why it is different to the quarterly CPI. In the end, while it does suggest some downside risk the headline CPI, it is less clear what it means for the Trimmed Mean.