Well the RBA raised official cash rates by 60 points yesterday. They are now at 1.35%. I would prefer them to be at 1.5%. This is because the neutral rate is somewhere between 1.5 and 2% and the sooner we get there the better.
I think we can assume an official cash rate of 2.5% by the end of the year if we take Lowe at his word. That would mean monetary policy is mildly contractionary. IF the Government reduces the structural budget deficit significantly ( there was no reduction in the last budget) then that might be it.
However economics is not a science by educated guesswork. My GUESS is the RBA will take a breather at 2.5% and see what happens.
Hopefully by the end of next year inflation will be in the 2-3% band. Hopefully
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