Today, the RBA Board can metaphorically go to
the races. We see no prospect that the RBA will choose to surprise markets
tomorrow. Rate moves in future will be well telegraphed.

The November Statement next week will be just one
stepping stone on that path. The governor is addressing Australian Business
Economists on 13 December and the recent developments suggest he should be
giving business economists an early Christmas present on his revised thinking.
We suggest his focus should be on how quickly US rates are catching up with
Australian rates, and he might trace through the depressing consequences for the
Australian dollar, which takes away the excuse to hold rates below normal Down

There needs to be plenty of jawboning before the
year is out, in order that the rate rise in February or March is virtually a
yawn. The RBA will want to avoid at all costs the public and political outrage
that followed its essential, but perhaps inadequately telegraphed, move in March
of 2005 to hike rates by 25bp. Read more here.