One minute we are told inflation is in the bag, seven weeks later we are worried that it’s not. This change in tone erodes trust Following a spate of soft data, financial markets had priced in a near certainty that the Reserve Bank would cut interest rates this week – so it came as a shock to many when they chose to leave the official cash rate unchanged at 3.85%. As the treasurer noted, the decision was “not the result millions of Australians were hoping for.” Mortgage holders can take heart, however, from the RBA governor’s words at the post-decision press conference, where she implied that a rate cut following the August meeting was pretty well in the bag. “The board decided to wait a few weeks” she told reporters, adding that the decision was around the timing rather than direction of rates. Continue reading...