The Reserve Bank meet tomorrow and popular consensus amongst Economists is a rate drop of 0.25% with the banks passing on about 80%.

But popular consensus was turned on it’s head in November.

In my view nothing much has changed in the last month for the Reserve Bank to adjust the cash rate.

Over the years (decades – now Im feeling old) that I have been observing interest rates there is one subject that dominates the decision.  It isn’t consumer confidence, business capital expenditure forecasts, the value of the currency, the terms of trade, home prices, political pressure or the GDP (which is flat lining).

Inflation and in particular keeping inflation with in the 2% – 3% band.  Where does it sit today?  Dead smack in the middle of the target range 2.50%.

So, having my share of debt I would love, dearly love, the interest rates to come down but in my non-consensus view they will remain unchanged.

I hope Im wrong.