The Reserve Bank's Monetary Policy Board meets on Monday and Tuesday and will publish its decision at 2.30pm on 11 August, with the cash rate target at 4.35 per cent and headline inflation running at 3.8 per cent.
That inflation figure comes from the Australian Bureau of Statistics, which put the consumer price index at 3.8 per cent for the year to June in its 29 July release. The trimmed mean, the measure the Bank leans on because it strips out the largest price moves in both directions, was 3.6 per cent. Both sit above the 2 to 3 per cent target band.
The Bank has already moved three times this year. It raised the cash rate in February, March and May, the last of those a 25 basis point increase to 4.35 per cent carried eight votes to one, with the dissenting member preferring to hold at 4.10 per cent. It then left the rate alone at the 16 June meeting.
Households have absorbed those increases without pulling back hard. The ABS recorded household spending up 0.8 per cent in June, in figures released on 4 August, and unemployment at 4.4 per cent for the same month, released on 23 July. Neither number hands the board a reason to ease.
The complication is fuel. Brent crude closed at US$82.49 a barrel on 6 August, up 3.8 per cent, after Iranian state media published a draft plan setting conditions on shipping through the Strait of Hormuz. Under the draft, United States and Israeli vessels would be barred outright, other countries Iran judges to have harmed it would have to pay compensation before transiting, and ships that breach the rules would face penalties worth 20 per cent of their cargo.
Petrol was already heading one way. The fuel excise returned to its full rate of 52.6 cents a litre on 1 August, ending the relief the government had run since April. That lands in the September quarter CPI, not the June figure the board will be looking at on Tuesday, and it arrives on top of whatever the oil price does next.
Neither input answers to interest rates. Monetary policy works on domestic demand through borrowing costs. It does not change the price of a barrel of crude or the rate of Commonwealth fuel tax, both of which flow into the same index the board is trying to bring down.
Tuesday's decision comes with the quarterly Statement on Monetary Policy, published alongside the February, May, August and November meetings. That document carries the Bank's updated forecasts for inflation, growth and unemployment, and it is where any shift in the expected timing of a return to the target band will show up.
Three meetings remain after Tuesday: late September, early November and early December. The forecasts released at 2.30pm will say more about those than the rate decision itself.
