(i) State budget papers
Each year in May the Victorian Government publishes its budget for the coming financial year. The budget provides projections of government income and expenditure for the year ahead and economic projections for the three years from the budget year.3
The State Budget Update released each year in December also publishes inflation figures.
(ii) Reserve Bank target inflation rate
The Reserve Bank of Australia (RBA) is responsible for formulating and implementing Australian monetary policy.
It targets consumer price inflation of two to three per cent a year on average, over the cycle - a rate low enough not to materially distort economic decisions in the community.4
(iii) OECD economic forecasts
Twice a year, the Organisation for Economic Co-operation and Development (OECD) analyses the major economic trends in member countries. It provides a range of cross-country statistics, including forecasts of consumer price inflation over the next two years.
Other intergovernmental organisations, such as the International Bank for Reconstruction and Development (IBRD), the IMF (International Monetary Fund) and the specialised agencies of the United Nations, also forecast inflation and other economic variables.5
(iv) Fixed coupon and indexed bonds
The Reserve Bank of Australia releases daily statistics on Indicative mid-rates of selected Commonwealth Government securities.6
• The yield on Treasury Fixed Coupon Bonds contains market expectations of nominal interest rates over the period to maturity.
• The yield on Treasury Indexed Bonds shows market expectations of real interest rates over the period to maturity.
• The market expectation of inflation over the period to maturity can be calculated from these yields.7 The volume of transactions in longer dated bonds often tends to be relatively thin, affecting the reliability of estimates of expected inflation using these calculations.
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3 Available online at www.dtf.vic.gov.au.
4 Reserve Bank of Australia, www.rba.gov.au/MonetaryPolicy/about_monetary_policy.html
5 e.g. IBRD, World Development Report, published annually; IMF, World Economic Outlook, published quarterly.
6 Reserve Bank of Australia, www.rba.gov.au/statistics/indicative.html
7 Determined from the yield on Treasury Fixed Coupon Bonds divided by the yield on comparable Treasury Capital Indexed Bonds.