i expect the reserve bank next week to hold of on making any move on the interest rates.
which begs the question........is it the Government or the Reserve bank which sets interest rates.
of course we know its the Reserve Bank,
Mr Howard and indeed Mr Rudd have both said without equivocation its the sole role of the Reserve Bank to monitor and set interest rates based on keeping inflation within a 2 to 3% band.
Whilst i expect no rise next week as i believe the Reserve would see itself interfering in the Political process and this would be the case if Labor were in power......i believe we will get a rate rise of possibly 50 basis points in December.
Neither side of politics can do anything about rate rises...........except to have a policy framework which will not add to inflation.
The biggest contributor to inflation are wage rises.......and herein lies the risk.
with a Union dominated labor party applying wage pressure.......inflationary targets will be exceeded only causing the Reserve to lift rates more.
