The RBA will not announce its intentions until after the...

The RBA will not announce its intentions until after the February Board meeting (5th February). In previous times the RBA announced it monetary policy intentions at 9:30am the following morning, however they recently changed this such that it will now be announced at 3pm on the day of the Board meeting. In other words, mark 3pm on 5/2 as an important time in your calendar.

As an aside, the assumption out there is that they will raise rates by 0.25%. On the CPI figs alone you could say that this is a done deal. However, what people are forgetting is that banks have already raised lending rates by between 0.1% and 0.2% during the last month, and with the change in credit spreads in that period it is possible that banks will make a further increase in February by 0.10%, even without central bank intervention (note that the 3 year AA bank spread has moved out from +9bp a year ago to +47bp at last issue [WBC and CBA recently issued 3 year FRNs at that level]).

The only downside to "not increasing" is the roll-off associated with Q1/08 CPI data (due for release in late April 2008). I personally think that is more of a concern than the current data; and the RBA may hold back on the current data, knowing that (i) their is already a quasi rate hike out there, and (ii) the chances are that they will need to increase rates in May.

Best regards
Kit