Interest rates
With yesterday’s news that underlying or core inflation is above the Reserve Bank’s target range of two to three per cent, an interest rate rise is a safe bet when the Reserve Bank Board meets on the first Tuesday in November.
It will be the third increase this year, and the seventh straight rise since 2002. Some economists are predicting an eighth increase in February 2007.
In July I wrote that we are starting to see increased speculation that the 2007 election will see a change of government driven by a change in the economic fundamentals. I expect more of the same.
It will be interesting to see how the betting market responds in the next few weeks.
Update 11 November: Labor are keen to make this an election issue with the following campaign.
