Terry McCrann offers up his calculus:
"All this means, simplifying a complex analytical process, that if the underlying inflation numbers for the June quarter come in at 0.7 per cent or lower, the RBA would leave rates unchanged at the next meeting in August, and then wait on the September quarter CPI data.
A 0.7 per cent number would have annualised inflation below the target 3 per cent ceiling, possibly into a slowing economy and with no great signs of inflation pressure in either prices or wages.
At the other end, if the underlying inflation number came in at 1 per cent or higher, that would be unacceptably and dangerously high -- an annualised inflation rate of over 4 per cent.
That would mean a rate hike in August unless there was much greater evidence then than now of really serious slowing in the broader economy. By serious slowing, I mean recession. Or clear signs of slowing out of China.
The bit in between is the complex and challenging area. Especially as it would come after an 0.85 per cent (averaged) underlying number for the March quarter and low numbers all through 2010.
'Normally' a 0.8 per cent print coming on top of 0.85 per cent the previous quarter -- making a very solid annualised 3.3 per cent (into an expected boom!) would spark a certain rate rise.
This time, given the pervasive non-resources softness, I'd suggest Stevens would risk staying the RBA's hand until November. Unless again, and this is why it is complex, there were signs the softness was overstated.
It would be subtly the other way with a 0.9 per cent number. An August rate rise would be almost as certain as with a 1 per cent number. Combined with March, the annualised 3.5 per cent at the start of the resources boom would be dangerously explosive."
