What should Dr Bollard do tomorrow?

Fran O’Sullivan has an open letter to Dr Bollard on why he should not put the cash rate up tomorrow. She tells him to ignore those who say he has no alternative (which may be aimed at people like me – Fran gave me a reasonable decent bollocking over my attacking Matt McCarten on this).

She also notes that John Key has called for them not to go up, and if one assumes Cullen doesn’t want them up, he has bipartisan cover.

The Dominion Post editorial also calls for Dr Bollard not to put the rate up, citing declining house sales.

I suspect the traders have already assumed the cash rate will go up, and that is one of the reasons for the dollar’s continual climb. However it has dropped around 50 points today which is a lot, so maybe it has peaked?

My personal view is unchanged. It doesn’t matter that Michael Cullen and John Key both want you not to. If as Governor Dr Bollard believes that without an increase, inflation would breach 3%, then he is obliged to put the cash rate up. Inflation is never the answer!