An August rate cut was always going to be improbable, barring a rogue core inflation number (something equal to or less than 0.3%) or a "surprisingly" negative shock out of Europe, which takes some effort these days. The RBA has for a long time been banking on heightened global economic volatility, so the day-to-day ructions rumbling out of Europe should not change its already very stimulatory stance.

How do I assess the impact of yesterday's inflation data? The policymaking decision should be clear. First, the most credible information we have on economic growth ­-- the first quarter national accounts -- surprised the RBA (and dovish economists) significantly on the upside. Over the 12 months to March, GDP was at trend or higher -- certainly nothing that ostensibly warrants 125 basis points worth of cash rate cuts (or punishment for prudent savers).

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