The Reserve Bank has signalled once again that tomorrow's official inflation result could be the trigger for an interest rate cut on Melbourne Cup Day.
The RBA's deputy governor Ric Battellino says the recent updated outlook makes inflation less concerning while the debt crisis in Europe remains the big global fear.
But Mr Battelino has warned the central bank is still on inflation watch as it waits for the pressures from the next mining boom to hit.
Read Ric Battellino's speech delivered in Sydney this morning.
Read my story on ABC News Online and listen to my analysis of Mr Battellino's comments broadcast on The World Today.
Here's the RBA's cash rate target going back to January 1990.
Mr Battellino, like all economists, will be anticipating tomorrow's consumer inflation data from the ABS to determine whether there is a case to cut the cash rate to 4.5 percent or to sit back and wait for more information.
Most economists believe inflation for the September quarter will be noticably lower. But the Reserve Bank but will need to see underlying inflation at or below 0.6 percent on the quarter or 2.6 percent year on year.
But Mr Battellino, who is regarded as an inflation hawk, says he does see inflation as "less concerning".
On the world's biggest worry - the debt crisis in Europe - he believes it is possible that the global economy could take a sharp turn for the worse, making the point that the situation in Europe is "particularly disturbing".
However, Mr Battellino said recent economic data has been better than expected given that the jobless rate for September unexpectedly fell from 5.3 to 5.2 percent.