The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Thursday, August 12, 2010

Rory Robertson getting bearish

The good oil from one of the best economic brains in the business. Rory Robertson has arguably the most impressive forecasting track-record of any Australian economist. This is his current take on local dynamics. In short, the end of the RBA's tightening cycle looks nigh--at least for as far as one can reliably peer into the future:

"Notwithstanding the latest big rises in coal and iron-ore prices, signs of “economic overheating” remain few and far between.

Indeed, beyond the mining boom, the Australian economy features subdued private demand driven by cautious consumers, cautious firms and cautious investors.

Accordingly, my guess is that we’ll see another benign CPI report at the end of October and that next year many will be surprised by the RBA’s measures of trend inflation falling into the lower half of the 2-3% band.

The RBA’s cash rate probably will be left unchanged at 4.5% into 2011, with policymakers watching on respectfully as the US and European economies struggle with their immense economic problems, and the Chinese economy settles back onto a more-sustainable path after last year’s extraordinary growth surge.

The fact that Fed and the ECB are still busy easing their monetary policies nearly two years after the collapse of Lehmans should give some of the more optimistic commentators pause for thought. And just because Australia has done well so far doesn’t necessarily mean it’s all onwards and upwards from here.

There’s still plenty of time for the world to try to fall apart. Almost everyone assumes that the RBA’s next move on rates will be another hike, but - with the developed world still looking rather shaky - that’s absolutely in the lap of the gods."