There was a great piece from MNI journalist Sophia Rodrigues yesterday. Most of the time Rodrigues’ work is gated at MNI, but she can be found on Twitter, @MNIANZ

Rodrigues argues that “a soft inflation outcome” (the next CPI release is on January 28) “coupled with downward revisions to inflation forecasts could provide the RBA with scope to lower the cash rate” at its February meeting (February 3):

  • Says the minutes of the December meeting… suggested there may be a mild downward bias to interest rates as the board discussed “the factors” that could lead to an easing of policy in 2015
  • Says Governor Glenn Stevens may be hoping for this (i.e soft inflation) because that would give a positive spin to a rate cut, rather than a negative one.
  • In an interview with the Australian Financial Review published on December 12, Stevens didn’t dismiss the idea of a still-lower cash rate but said he hoped “that any decision that might be taken for even lower rates is actually more of a positive narrative.”

Food for thought indeed.