The June inflation rate of 3.8% ended any real prospect of a rate rise next month, despite investors assuming the Reserve Bank would rather raise rates than not.

There is a certain ghoulishness when it comes to economics and especially inflation. A “good” number will inevitably be dull news, whereas a bad number – one that is higher than expected or just higher – can lead to all manner of gnashing of teeth and wailing as the topic quickly shifts to interest rates.

The linking of things to interest rates is not limited to inflation.

Last week the June unemployment figures notionally showed unemployment had remained steady at 4.4% but when you scrapped back some of the rounding, it actually rose from 3.37% to 3.43%:

The underemployment rate rose from 6.3% to 6.5%, which meant that the underutilisation rate – the total percentage of people in the labour force looking for a job or for more hours rose rather steeply from 10.7% to 10.9%

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Like a naive fool I suspected this would mean the likelihood of an interest rate rise would perhaps fade. After all, only a very silly person would want to raise rates and thus slow the economy even more when unemployment and underemployment were both rising. Why seek to make things worse?

And then investors went from betting that the odds of a rate rise next month........

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