I suppose we should be grateful the Reserve Bank doesn’t pay much attention to the monthly inflation data, only the quarterly, so our emotions don’t get jerked around every four weeks, just every three months.

But most of all we should be grateful to them for not blindly following other central banks and hard-line economists to a 5 per cent policy rate. Instead, they held back, trying to keep the misery to a minimum while still getting inflation down.

Past RBAs would have brought about another “recession we had to have”.

Some recent history is in order to set the scene for where we are now, and the pressure that’s now on the RBA to change tack.

On October 25, the ABS announced that the September-quarter core inflation rate was 1.2 per cent versus the previous quarter, which was an “upside surprise”. (Core inflation is what the RBA sets interest rates by. In Australia it refers to the “trimmed mean”, where the largest and smallest 15 per cent of price moves are removed and the statisticians do an average of the middle 70 per cent.)

As a result, economists predicted a rate hike in November, and on Melbourne Cup Day the RBA duly announced the 13th increase in the cash rate since May 2022. The statement retained the “tightening bias”, which is to say they made it clear they were leaning towards another one.

The Statement on Monetary Policy (SMP) a few days after that lifted the RBA’s inflation forecast for the year to December 2024........

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