Interest Rates

 The RBA announced yesterday that there would be no change to official cash rates.

Too many people are getting worked up about this.

The last monthly CPI showed an unexpected rise HOWEVER the current monthly series finishes in October. It is currently about 40% of the quarterly CPI series ( I think) and thus is erratic. We have to wait for november until we eventually get a monthly series which is exactly the same as the current quarterly series and we get history with it as well. Well done Dr Gruen ( He has a PhD in both physics and economics). I remember being part of the market requesting just this way back in the 1980s!! Up until now the RBA has not put a lot of credence in what the monthly CPI is. when it was falling bbut they are now when it could be rising. This is sensible.

In late october we get our last quarterly CPI. If this confirms inflation is not dropping perhaps even rising then rates will stay as they are. I think they will even if the CPI does not as the RBA is very risk averse.

They can sit on their hands knowing they have regular monthly CPIs in which they can have confidence in.

If you are risk averse it makes sense to do this. you do not want the economy growing too strongly and thus inflation rising again.  you wait until you are confident inflation stays in the 2-3% range.