The CPI and main underlying inflation readings were all below consensus and our forecasts ranging from 0.3% q-o-q to 0.5% with the headline CPI at 0.4% (consensus, 0.6%, Laminar, 0.4%). Annual inflation readings are just below the mid-point of the RBA’s 2-3% target range. No surprises in the composition of the CPI rise other than the bigger than expected fall in food prices. The market will speculate that the RBA has room to cut rates further helping to boost risk assets. Our view is that the RBA will be worried that further rate cuts would risk turning strengthening spending on housing and in retail stores to full boom, something they will want to avoid. We still see the cash rate on hold at 3.00% for a protracted period, although the easing bias language in the monthly statements will remain well into the second half of the year.