Australia's central bank slashed its inflation forecasts on Friday and warned that the outlook for wages and price pressures were a key uncertainty, suggesting the door was open to another cut in interest rates.
In its 66-page quarterly report, the Reserve Bank of Australia (RBA) gave no explicit guidance that it will ease again as it maintained its growth projections for a gradual strengthening through mid-2018.
On Tuesday, the RBA cut its cash rate by 25 basis points to an all time low of 1.75 percent, citing surprisingly low inflation readings for the first quarter.
"The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time."
The RBA now sees underlying inflation at just 1 to 2 percent for 2016, down from a previous forecast of 2 to 3 percent. The central bank aims to keep inflation withing a 2 to 3 percent band over the medium term.