Inflation pointer to interest rate hike

Inflation figures out on Wednesday are likely to be a sign post to what action the
Reserve Bank of Australia will take on interest rates at its Melbourne Cup Day
meeting.

The consumer price index (CPI) for September will give the central bank the clearest
indication of whether a 25 or 50 basis point hike is the best medicine for the
recovering economy.
Economists are widely tipping a 25 basis point increase in the official cash rate at
the bank's November 3 meeting.
It currently stands at 3.25 per cent after a 0.25 percentage point increase in October.
But a strong inflation figure could be a trigger for the bank to move by as much as
50 basis points.
Aside from the economy, much of the debate in federal politics will revisit issues
from the last week, with climate change, asylum seekers and telecommunications
taking centre stage.
The hot-button issue of last week - the influx of asylum seekers heading into
Australian waters - will continue to dominate political debate.
After discussions with other regional leaders at the East Asia Summit in Thailand
this weekend, Prime Minister Kevin Rudd will return to question time on Monday where
the opposition will continue to pressure the government over its border protection
policies.
"Mr Rudd must take responsibility for softening our border protection laws and he
must come up with a solution to the inevitable consequences of his decision to
soften our border protection laws," Deputy Liberal leader Julie Bishop told
reporters on Sunday.
In the House of Representatives, the massive package of bills to put in place an
emissions trading scheme (ETS) will begin its uncertain passage through the
parliament as debate on the legislation begins.
But the real test for the ETS will be in the Senate, where the legislation will be
debated in November.
Climate Change Minister Penny Wong and opposition resources spokesman Ian Macfarlane
are continuing negotiations on amendments to the bill, which could help win
coalition support for the legislation.
Another bill that could face uncertainty in the Senate is legislation that reforms
the telecommunications sector and will ultimately force the break-up of Telstra.
The opposition is against the proposal but there is division in the coalition, with
the Nationals supporting the structural separation of Telstra.