<\/p>\n
RBA Governor Michele Bullock is expected to announce a May cash rate increase. Picture: Martin Ollman<\/p>\n
ANALYSIS<\/p>\n
Get ready for drastic action from the RBA at its May meeting. <\/p>\n
Make no mistake. Rates will be going up further this year, potentially bringing the cash rate past the 4.5 per cent mark. Now it\u2019s just a matter of how hard and how quickly the central bank moves.<\/p>\n
There has been some talk around why the RBA should not hike rates in May. Former breakfast TV host and now Compare the Market spokesman David Koch came out this week <\/a>saying borrowers deserve a lifeline.<\/p>\n MORE: Inflation crushes any hope of rate relief<\/a><\/p>\n He said the increase in fuel prices had already delivered a financial impact similar to a rate hike and that the RBA will be \u201cthinking about\u201d Australian households.<\/p>\n \u201cConsumer confidence has plunged and business confidence has fallen to almost record lows,\u201d Koch said. \u201cThe (RBA) doesn\u2019t want to crush consumers and businesses with another interest rate increase.\u201d<\/p>\n It\u2019s a reasonable call, but the RBA has showed us time and again that its decisions are based strongly on how certain numbers stack up.<\/p>\n Compare the Market economic director David Koch. Picture: Jono Searle<\/p>\n And those numbers have not stacked up well, with April\u2019s CPI release from the ABS revealing annual inflation is now at 4.6 per cent, up from 3.7 per cent last month.<\/p>\n When the board meets it will look at the inflation numbers. It will decide, if history tells us anything, that these numbers are too high. It will consider the fact that its job is to get inflation under control, which means taking action.<\/p>\n<\/p>\n