Confidence sinks
CBA's spending tracker appears to be rolling over, as a combination of price inflation and the prospect of rising interest rates bite into consumer confidence.
Source: CBA
An overlay of Bloomberg's (declining) commodity price index versus headline US inflation suggests that the headline rate of inflation should soon be back on the way down.
Source: Bloomberg
Economists are now debating how far the Reserve Bank will need to take the cash rate target to get inflation back down on to the desired trajectory.
Consensus seems to land at around 2.6 per cent, though market pricing has been hinting at a higher terminal rate.
The Reserve Bank ran some scenario analysis today in a speech here to look at how households will fare if interest rates were to rise by 300 basis points from the market lows.
