When the Reserve Bank’s monetary policy committee (MPC) last met two months ago, it didn’t just repeat its comments about pressing the pause button on interest rates, but shifted its stance to indicate that it might be reaching the end of the interest rate hiking cycle. Going into this week’s MPC meeting, it’s not at all clear that the end is nigh. And though the inflation outlook may be looking better, we shouldn’t expect the Bank to look at starting to cut interest rates any time in the near future. The reasons are both global and local. Globally, Donald Trump’s election victory has turned financial markets upside down, driving the dollar stronger and lifting yields on US treasury bonds on the prospect that his administration could embark on an inflationary fiscal stimulus programme that could see the US Federal Reserve becoming more hawkish. As it is, Fed chairwoman Janet Yellen has all but written a guarantee that the Fed will hike rates at its December meeting, and markets are ...
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