The $64,000 Question

The $64,000 Question.
From the minutes of the RBA's May meeting: "The question therefore remained whether the setting of monetary policy was sufficiently restrictive to secure low inflation over time. Members spent considerable time discussing the case for a further rise in the cash rate. But on balance, given the substantial tightening in financial conditions since mid 2007, and the extent of uncertainty surrounding the outlook, the Board decided that it was appropriate to allow the current setting of monetary policy more time to work. However, should demand not slow as expected or should expectations of high ongoing inflation begin to affect wage and price setting, the outlook, and the stance of policy, would need to be reviewed. The Board would need to evaluate prospects for economic activity and inflation in the light of incoming information. So what's the likely upshot of all this? Who better to ask than the current leaders of the Weatherman's tipsters league table. "We now expect economic growth and inflation to remain higher for longer. We believe this will prompt the RBA to raise interest rates at least once and probably twice in the second half of this year." ANZ
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