Well, maybe it was too good to last. After the raft of better-than-expected economic data over the past couple of months, the Australian economy finally posted a key figure that fell short of the consensus forecast.

The country’s Consumer Price Index (CPI), one of the main measures of inflation, rose 0.6 percent sequentially during the first quarter, following a rise of 0.8 percent in the fourth quarter of 2013.

The latest result was two-tenths of a percentage point below economists’ expectations. On a year-over-year basis, the CPI increased by 2.9 percent, which was three-tenths of a percentage point below the consensus forecast.

The most significant price rises this quarter were for tobacco, up 6.7 percent, automotive fuel, which rose 4.1 percent, medical and hospital services, which climbed 1.9 percent, and pharmaceutical products, which increased by 6.1 percent.

Tobacco and medical expenses rose due to changes in government policy, including an increase in a federal excise tax for the former and a reduction in subsidies for the latter.

At the same time, furniture prices fell 4.3 percent, maintenance and repair of motor vehicles dropped 3.3 percent, and international holiday travel and accommodation decreased by 2.4 percent.

While consumers typically dread the prospect of inflation, when an economy is emerging from a period of weakness a rise in prices can actually signal a further rebound. And central banks have the ability to choke off inflation before it gets out of control, except during periods of stagflation, when weak growth is accompanied by rising prices.

By contrast, disinflation, or even outright deflation, can quickly spiral out of control. When that happens, even an extraordinarily accommodative monetary policy can do little to offset fearful human psychology, such as what occurred during the Global Financial Crisis.

In fact, inflation targeting is the primary mandate of the Reserve Bank of Australia (RBA). The goal of the central bank’s monetary policy is to achieve an inflation rate of 2 percent to 3 percent, on average, over the course of a cycle.

The RBA defines the inflation target as a medium-term average, rather than as a rate (or band of rates) that must be held at all times. This allows for flexibility in policymaking as the bank waits for the effect of a change in interest rates to flow through to the economy, which for some sectors can take as long as two years.

The central bank has been on a rate-cutting cycle since late 2011, with the last decrease in the benchmark cash rate this past August bringing short-term rates to an all-time low of 2.5 percent. Prior to the latest data on the CPI, traders had been betting the RBA would be forced to hike rates later this year, particularly after the surprise jump in the CPI for the fourth quarter.

But with the slackening in inflation more recently, most central bank watchers now believe interest rates will be stable for the duration of 2014. Indeed, financial markets are pricing in a 56 percent chance of a rate hike over the next year, down from 92 percent prior to the CPI release, according to data aggregated by Credit Suisse.

That’s good news at this stage of the cycle because policymakers are keen for non-resource sectors to lead the economy now that mining investment is on the wane.

And a rate hike at this juncture would not only threaten the strength of rate-sensitive sectors such as real estate, it would also boost the exchange rate and undercut exports.

In response, the Australian dollar, which had been in rally mode in the three months since hitting a three-year low of USD0.868 in late January, continued its long-awaited correction. The aussie currently trades near USD0.929, down about 1.4 percent from its year-to-date high.

Equity investors also appreciated the fact that the RBA now has additional breathing room to hold rates steady. The S&P/ASX 200 hit a post-Global Financial Crisis high of 5517.8, with a total return of 118.9 percent since its bottom in March 2009.

Portfolio Update

According to unnamed industry sources cited by the Australian Financial Review, Aggressive Holding Crown Resorts Ltd (ASX: CWN, OTC: CWLDF, ADR: CWLDY) was preparing to submit a bid this week for The Cosmopolitan of Las Vegas, a hotel and casino complex that’s currently owned by Deutsche Bank.

The German banking giant first acquired the property in early 2008 as the result of a foreclosure after developer Ian Bruce Eichner defaulted on a USD760 million loan. Mr. Eichner had originally intended to build a condominium tower, but Deutsche Bank scrapped the idea in favor of a hotel. The bank ultimately invested nearly USD4 billion, which gives the project the dubious distinction of being one of the most expensive casinos to be built in Las Vegas.

Since opening in late 2010, the Cosmopolitan has yet to post a profit, accruing net losses of USD298.3 million in its first three years of operation, including a net loss of USD94.8 million for full-year 2013 on revenue of USD652.5 million.

While the Cosmopolitan has attracted customers to its clubs, restaurants and shops, it has yet to produce strong gaming revenues, perhaps in part because, owing to its present ownership, it lacks a well-known gambling brand.

The entire complex, which boasts 3,000 rooms, two 52-story towers, and a 110,000-square-foot casino, sits on 8.7 acres situated on the Strip between Bellagio and CityCenter. Deutsche Bank is reportedly hoping to offload the property for at least USD2 billion. In addition to Crown, there are at least several other potential suitors.

If Crown has the winning bid, this would actually mark the company’s second attempt to extend its empire to Vegas. The Melbourne-based casino operator, which is controlled by billionaire board chairman James Packer, offered to purchase Cannery Casino Resorts for USD1.75 billion in 2007, but the acquisition was ultimately tabled in early 2009, though not before the company incurred nearly AUD500 million in breakup fees and other related expenses.

Crown also invested USD250 million for a 19.6 per cent stake in the Fontainebleau Resort, which was written off when the company building the project went bankrupt. Additionally, Crown wrote off an AUD172 million investment in Harrah’s and an AUD242 million investment in Station Casinos during that same period.

The timing of those deals, which occurred just prior to the Global Financial Crisis, couldn’t have been worse, and Mr. Packer has admitted his first Vegas foray was one of his biggest strategic blunders.

However, Crown’s financial strength has improved in recent years, and it’s once again in a major expansion mode both at home and overseas. The company is also bidding for a USD1 billion-plus casino project in Brisbane, after winning the right to operate a VIP gaming facility at its AUD1.3 billion luxury hotel project in Sydney.

Meanwhile, Crown is building new casinos in Sri Lanka (a USD400 million project) and the Philippines, and it has expressed an interest in building a USD5 billion-plus casino and resort in Japan, if the country legalizes casino gambling.

Some of the aforementioned activity is occurring through Melco Crown Entertainment Ltd (NSDQ: MPEL)–a joint venture in which Crown owns a 33.6 percent stake alongside Hong Kong businessman Lawrence Ho, who is the eldest son of casino magnate Stanley Ho. Melco Crown principally owns and operates hotels and casinos in Macau, though now it’s looking to extend its footprint throughout Asia.

Mr. Packer is himself a scion of wealth, having inherited pay-TV company Consolidated Media Holdings, when his father Kerry Packer died in late 2005. Consolidated Media was sold to News Corp in 2012. Mr. Packer, who has a net worth of USD6.5 billion, is listed at No. 212 on the Forbes List of World Billionaires and is the second-richest person in Australia.

Over the trailing 12 months, Crown’s stock has gained 29.9 percent on a price basis, beating the S&P/ASX 200 by nearly 20 percentage points. The shares presently trade just 5.5 percent below their all-time high of AUD17.60, which was hit back in mid-January.

Crown currently enjoys strong bullish sentiment among analysts, with 12 “buys” and four “holds.” The consensus 12-month target price is AUD19.76, which suggests potential appreciation of 18.8 percent above the current share price.

With a net yield of 2.2 percent, Crown is a buy below USD16.50.