FYI | May 02 2007
By Greg Peel
Ahead of last week’s first quarter CPI result, economists were fairly evenly divided as to whether the Reserve Band of Australia would increase rates in May. As many had expected, but not received, a rate rise in April, there was a growing belief that May would thus be likely.
Then came the CPI result, pitching year-on-year at 2.4% instead of pushing 3% as consensus suggested. Immediately expectations of a rate rise went out the door, and indeed many now suggest there will not be a rise at all this year.
The RBA does not explain its actions when it does “nothing” (even though we would argue making no change is a decision as well). There is a Statement on Monetary Policy due on Friday.