The RBA has held the cash rate at a 13-year high for more than a year, awaiting further evidence that inflation is irreversibly back to its 2 per cent to 3 per cent target. Markets since Mr Trump returned to the White House are on a roller-coaster ride as I discussed on my live show on Tuesday. Now Beijing has hit back with tariffs on US goods in a swift response to new American levies on Chinese imports. Earlier, Mr Trump suspended his threat of hefty tariffs on Mexico and Canada for a month. So what will the RBA do?
While one factor in play is Donald Trump’s chaotic trade policies, we also have the “adjusted real inflation rate looking though the Government support for electricity, rents and medicals. Is the inflation really well anchored in the 2-3% band, a signal the RBA is seeking?
The December quarter inflation report did little to counter the RBA’s consistent message demand in the economy is still too high.
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