This morning the Australian Bureau of Statistics revealed that total consumer price index (CPI) inflation over the quarter to March 31 2019 went nowhere or 0% compared to the prior quarter ending December 31 2018.
Compared to the prior corresponding quarter March 31 2018 total CPI lifted a feeble 1.3%. On a "weighted median average' basis the two reads came in 0.1% and 1.2% higher for the two respective periods.
No wonder traders and currency speculators are upping bets on the Reserve Bank of Australia being forced to cut benchmark lending rates within the next couple of months in a bid to stimulate inflation that is grinding to a halt.
The RBA is mandated to achieve an inflation rate between 2%-3% 'over time' via monetary policy and is vulnerable to accusations it's asleep at the wheel unless it acts soon.
The S&P/ ASX2oo (ASX: XJO) hit a 11-year high today in response to the news as share market traders anticipate a rate cut will mean more liquidity finding its way into growth stock valuations and a yield hunt supporting traditional SMSF dividend favourites like Telstra Corporation Ltd (ASX: TLS) or Westpac Banking Corp (ASX: WBC).
However, a better way to play the rate cut theme is to look to overseas earners that profit more as the Australian dollar weakens.
Somewhat serendipitously the leading healthcare shares have fallen in value recently, despite them earning nearly all their profits in U.S. dollars. As such at the top of my shopping list would be the likes of Cochlear Ltd (ASX: COH) or ResMed Inc. (ASX: RMD).
