Inflation is not a dragon waking from its slumber. In the eyes of the Reserve Bank, it’s a camel with price humps and interest rate pain ahead.

Confirming it is going to sit on the interest rate sidelines well into next year – if not beyond that point – the bank on Tuesday revealed two key economic “humps” that have caught its eye.

The first is inflation.

Last week’s September quarter inflation report came as a surprise to the RBA, and the data did more than anything to change the bank’s expectations on interest rates over the coming 12 to 18 months.

The full percentage point jump in underlying inflation took the annual rate to 3 per cent.

According to the bank, that September quarter increase is a hump that’s going to sit in the inflation figures for the next year.

That means underl

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