Sharon Zollner

There's still a lot that could go wrong.

Well, yeah, actually, your timing's interesting, actually, because we've just had the Fed meeting in the US, and that was actually more hawkish than expected.

That is, they sounded more ready to hike inflation.

rates over there this year than the market was expecting.

So we've seen the market didn't love that.

And it wasn't all just about oil prices either, but just about broader inflation in that economy.

But in terms of the direct oil pass through, we've just recently revised down our peak

forecast for inflation here based on the monthly indicators that have come through.

But the Reserve Bank was never that worried about that initial spike.

They're worried about what happens after that and where does inflation go a year or two from now.

Well, no, they absolutely can.

They will.

No, but it comes back to what I was saying earlier about the fact that the economy actually looked like the recovery was actually a bit ahead of schedule.

before this happened.

Also, our business outlook survey was suggesting that some costs and more generalised inflation pressure, wage pressure, was actually returning ahead of schedule.

But you've really got to bear in mind the starting point for the official cash rate.

It was starting to look like that last cut at the end of last year might maybe have been a mistake.

The OCR is just 2.25.

That's a lot lower than the US or Australia.

So our take is that they'll still rather get back to neutral, which is sort of around 3%.