gutless rba, page-17

Contrary to conventional wisdom, central bankers do not set interest rates - the market does. Australian bond prices continue to rise and yields continue to fall (just as they are doing in the US too).

Unlike the RBA, the bond market sees no sign of inflation ahead. And because central bankers invariably follow the market (as set by bond yields) we should expect the next move from the RBA will be down. So the RBA will be forced to back-flip on its rhetoric, yet again, and start cutting rates in coming months. I actually expect the RBA will continue slashing interest rates as they chase the market down (both bond yields and the housing market) over coming years as the deflation intensifies. And having further to cut merely means we have further to fall.