Will the RBA hike in August?

These are the results of the always-valuable Reuters survey for the next CPI print. The average and median estimates for the trimmed mean of 0.8 per cent suggest it will be a line-ball decision as to whether the RBA raises rates in an election month. If the trimmed mean does come in at 0.8 per cent it will be the second consecutive quarter that inflation has troughed (?) at this level, which is still above the RBA's maximum 3 per cent target. One question is whether NZ's lower-than-expected inflation outcome last week presages something similar for Australia. You would have to think that if the trimmed mean is greater than 0.8 per cent the RBA will hike if only to preserve credibility in the face of its November 2007 decision. The alternative would be to run the risk of charges of politicisation. Note also that the "headline" numbers (first column), which is what unions use for indexation claims, look to be very ugly indeed with the quarterly forecasts running at an annualised pace of close to 4 per cent.