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Bo A To Hike I R This Week Not Due To Cpi Data

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Ross Gittins

July 31, 2006

FOR once the financial markets and wolf-crying media have got it right: the Reserve Bank board meeting tomorrow will decide to raise the official interest rate by 0.25 percentage points.
But whether there's a further increase to come in the next few months is much less certain. Remember that such an increase would take the official rate to 6.25 per cent - the peak it reached in August 2000, when households were far less indebted than they are today.
Why must rates rise this week? Well, not because last week's consumer price index result was a shocker, nor even because the inflation rate has rise to 4 per cent, but because of a deterioration in the outlook for
underlying inflation

Such data is ignored, of course, by Gordon where an admission of underlying inflation means failure to steer the economy on a prudent course. Boom and bust anyone?

Edited by Realistbear

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  • 301 Brexit, House prices and Summer 2020

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