No rate cut

 The last quarterly CPI was released yesterday and it was not good.

Here are two views:

• Greg Jericho
• Stella Huangfu
• Mark the Graph

I am in the latter's camp. although electricity rebates finishing was one of the reasons the rise was broad based. Thus a rate cut is off the cards.

I must add a caveat. There is a possibility it may have been a rogue number. this happens in statistics. Glenn Stevens when governor had not one but two rogue numbers!!

One other thing from november we get monthly CPI numbers which are done in the same way as the quarterly numbers. Indeed the ABS head Dr David Gruen ( this man is seriously intelligent. He has a PhD in both Physics and Economics) told someone we will get history for monthly numbers going back some two years or more.

although this is great we won't know about the seasonality of the figures. Thus my guess is the RBA will continue to rely on quarterly figures which they will calculate as they have shown themselves to be conservative or timid depending on your point of view.

At present the cash rate is 3.6%. In my view at best if inflation falls in the future it can only fall to 3.25% which is seen as the neutral rate. It can only fall further if the government pull their finger out and rid itself of the structural budget deficit.

Whoopsy.

I should have added the Fed has cut their cash rate by 25 basis points yet their trimmed mean rate is similar to ours. Bad move