This Dow Jones note highlights the confusion in the market as to whether the RBA will pre-emptively crush inflation expectations, or whether it is going to sit on its heels and wait until it sees evidence of problems already emerging:
2339 GMT [Dow Jones] Australian financial markets retain a benign view of the RBA's trajectory, factoring in just 24 bps of interest rate increases over the next year, according to Credit Suisse. That's up from 21 bps on Tuesday. Markets and economists appear at odds over the RBA outlook. Many economists say the RBA policy statements Tuesday indicate it remains fixed on the risks posed by a strong upswing in commodity prices and a lack skilled labor in the economy, to view interest rate increases by midyear as likely. That hawkish view is being reflected in the AUD/USD, which has established a foothold above parity, after weeks of frustration. The AUD/USD also is up on a move back to risk trades globally. The pair is at 1.0101. (james.glynn@dowjones.com)
