The RBA should increase the cash rate and communicate its intention to continue to do so until there is substantial evidence that inflation has turned the corner. The latest monthly measure of inflation fell, which is a positive development, but this is one number and inflation at 7.4% is still too high for the current level of the cash rate. In fact, the real cash rate is near a historic low which suggests that monetary policy settings remain quite expansionary. More needs to be done to put monetary policy on a more contractionary stance over the forecast horizon in order to ensure inflation returns to target and inflation expectations remain anchored.