“Households reawakening,
conditions easy, door opening to RBA hike”, says Macquarie
Bank’s Rory Robertson. It is always nice to receive support, but when it is from a genuine guru
it is doubly sweet.

Our words yesterday were: “In
short, the Australian economy is again picking momentum with growth likely to be
above trend in 2006. With the mother of all resource booms and the recent
sell-off of the Aussie dollar, the big issue for the second half of 2006 is
likely to be overheating and, dare we whisper, inflation. And we advise,
following Basil Fawlty: “Don’t mention the CAD!” “

It would be good if Robertson’s
final “guess” (that rates should rise as early as May) were correct as there is
a chance the economy will slip its traces about now and go galloping off toward
an awkward sunset. We think there is very little chance of a surprise rate hike
next month, for reasons explained in our regular
“monthly
“.

But if signs of overheating reach
blind Freddie proportions, even the Big Mac might be forced to into action, no
matter how inconvenient this might be for his loyal Deputy, Glenn
Stevens. But not today, Josephine. The
RBA’s website makes its usual bland comment: “At its meeting on 4 April, the
Reserve Bank Board decided to leave the cash rate target unchanged at 5.50 per
cent.”

Read more at Henry Thornton here.

Peter Fray

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