All eyes on CPI

All eyes remain focused on the release of the consumer price index (CPI) data to be released on January 24, with many economists forecasting inflationary pressures to exceed the Reserve Bank's target of 3 per cent and therefore placing the Reserve Bank under pressure to increase the cash rate for what would be the fourth movement in the last 10 months.

Another one quarter of percentage increase would mean the cash
rate has increased by almost 20 per cent in less than a year and
the impost on borrwers will have seen the average mortgage
monthly repayment increase by $170 per month.

While the Reserve Bank is obviously careful not to be seen as overly aggressive, they are mindful that global economic growth is forecast to be at the highest levels in 30 years and the Australian economy remains underpinned by the global resources demand.

Indeed many in New South Wales would argue that a further rate rise will spell a widespread state recession, and stimulus not restraint is what New South Wales requires.

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