The CPI was released yesrday and it was a shocker. Annual inflation is now 5.1% and might reach 6-7% in the quarters to come.
Forget about wages. the RBA should have had cash rates at 1.5% NOW .The CBA estimates 1.5% is the neutral rate. One has to ask why are interest rates so stimulatory when we are essentially at full employment. The RBA has been asleep at the wheel and way to complacent. Lowe has been way to dovish.
Rates need to be raised by AT LEAST 0.4% next tuesday. Anything less means the RBA has lost credibility.
All I'm advocating is getting cash back to normal. If wages take off of which I am sceptical about then interest rates can become contractionary.
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