WPAC citing, (very) brief summary by me:
- The Minutes of the November meeting revealed a new guideline for monetary policy, “acting consistently would support confidence in the monetary policy framework.”
- Having unexpectedly pivoted from increments of 50 basis points to 25 basis points in October moving back to 50 would not have been a “consistent” action.
- The motive of “consistency” does seem to be at cross purposes with the core policy of “[t]he size and timing of future interest rate increases will continue to be determined by the incoming data.”
- A third 25 basis point lift in December would certainly be “consistent”.
Westpac mention the drop in inflation in the monthly CPI data published earlier this week:
- Australian monthly CPI inflation (October 2022) 6.9% y/y (expected 7.4%)
and warn not to read too much into the monthly reports as its not nearly as complete as the quarterly report, along with:
- An important reason for care in reading too much into the result is the recent advent of special sales in November( Black Friday ; Cyber sales), which according to anecdotal evidence were extremely strong. That interpretation is consistent with the specific areas of weakness in October and would counsel the RBA to be very cautious in interpreting that result.
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The RBA meeting is Tuesday December 6, the statement is due at 0330 GMT.
The RBA hike cycle so far:
