The RBA should increase the cash rate at its next meeting. Monetary policy, while less expansionary than before, remains expansionary. With inflation running around 6 per cent, the real cash rate remains negative. Real rates for households and businesses are around zero as well. And the labour market continues to be quite tight. The exchange rate has recently depreciated as expectations of future monetary policy shifted in the United States. A weaker dollar will add to inflation. The RBA should now put more weight on the risks associated with doing too little: this is the risk of inflation taking a long time to return to target or of failing to return at all. At the moment, giving current inflation, low productivity growth, a weaker exchange rate, very high services inflation and negative real rates increasing the cash rate, in my view, is required.