February 2007 - Recently RBA Governor gave testimony to the House of Representatives Standing Committee on Economics, Finance and Public Administration. In his testimony he took what seemed like a surprisingly hard line on monetary policy (for an election year) to many. We were not surprised, however, as our research shows that in many ways inflation in Australia is running much higher than the official CPI figure shows. Our point estimate is closer to 7 per cent per annum, and likely range is well above than the 2-3 per cent target range of the RBA. Therefore aggressive action to restrain inflation, and particularly inflationary expectations is warranted over the coming months.