The Reserve Bank of Australia board meets next week on February 3. Since we changed our view on December 4 last year we have consistently argued that the board will decide to cut the cash rate by 25 basis points at this February meeting. In the discussion below we set out the reasons why we have retained that view.
In last week's note we highlighted the relevance of the December quarter inflation report as an important input to the policy decision. The report showed a slightly higher quarterly print on both headline and underlying inflation.