Two economies with much in common, Australia and Canada have nonetheless strode very different paths in the fight against inflation. / (min cost $ 0 ) or signup to continue reading The Bank of Canada on Wednesday cut the official cash rate to 4.5 per cent, after becoming the first Group of Seven economy to begin monetary easing in June.
Annual inflation in the Commonwealth nation is now comfortably back within target at 2.7 per cent. Yet price growth remains far from under control in Australia, which like Canada is a vast and sparsely inhabited English-speaking nation with a similarly sized commodities-heavy economy.
While the rest of the world contemplates rate cuts, the Reserve Bank of Australia's earlier dovishness affords it no such luxury. An important few weeks for the Australian economy begin with June quarter inflation data on Wednesday. Analysts say there is more chance of a rate rise than a cut at the RBA's next meeting in August, though most think it likely to remain unchanged.
The latest monthly inflation readout showed prices grew at four per cent over the previous year, well above the central bank's two-to-three per cent target range. Australia's central bank lags its Canadian counterpart so conspicuously because it took a much slower and softer approach to tackling inflation, NAB senior economist Taylor Nugent says. "The BoC was more assertive earlier in the hiking process," he told AAP.
"They took rates deeper into restrictive territory, they saw a more materi.