Why does the Reserve Bank of Australia pay close attention to the trimmed mean CPI inflation rate in addition to the overall CPI inflation rate?
A) The trimmed mean CPI inflation rate includes taxes, while the overall CPI rate does not.
B) The trimmed mean CPI inflation rate is less volatile and a better predictor of future CPI inflation.
C) The trimmed mean CPI inflation rate is more volatile and therefore a better predictor of trend inflation.
D) The trimmed mean CPI inflation rate has a lower average value and therefore makes the Bank look better.
Correct Answer:
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