Inflation expected to stay benign It looks like the Reserve Bank of Australia (RBA) boss will be able to keep saying his favourite phrase for a little bit longer. The inflation outlook would afford scope to ease policy further, should that be necessary. Glenn Stevens has been saying that, or something like it, consistently for at least a year. By the way, 'easing policy' means cutting the cash rate. March quarter inflation figures, due out on Wednesday, are expected to stay within the RBA's two to three per cent target range. The consumer price index (CPI), the key measure of inflation, is expected to rise by 0.6 per cent in the first three months of 2013, for an annual rate of 2.7 per cent, an AAP survey of 13 economists shows. This is up from the very low December quarter CPI of 0.2 per cent and its annual rate of 2.2 per cent. AMP chief economist Shane Oliver said falls in the prices of imports and the strong Australian dollar would be offset by seasonal rises in health and education costs. "Continued benign inflation will leave the door wide open for further RBA rate cuts," Dr Oliver said. In fact, an outcome of 0.4 per cent or below for underlying inflation could bring forward a rate cut to the May meeting given the soft run of global and Australian data we have seen lately. The central bank raises the cash rate if it thinks inflation in the medium term will be above its target band. It would cut the cash rate to stimulate growth, or if it looks like inflation is too low. The RBA has kept the cash rate at three per cent since the start of 2013, after reducing it four times in 2012. RBC capital markets fixed interest strategist Michael Turner said he expects the headline annual inflation rate to be 2.8 per cent. Housing cost have started to pick up as well. Rents are starting to tighten up, so housing will be a contributor there," he said. We think housing costs will pick up because rents have been higher. However, Mr Turner said he didn't expect the RBA to shelve any future rate cuts. Not really no. The underlying is the one to watch," he said. The rhetoric from the RBA that outlook for inflation gives them scope to cut will be unchanged after the data. The median forecast for underlying inflation, which excludes volatile price movements, is 0.5 per cent in the March quarter and 2.5 per cent over the year to March.