Oh deary, deary me. If you thought the pointy heads over at Martin Place had experienced some of their own inflation in recent times due to Australia's *providence* in skirting the worst of the GFC, there is more to come...Goldman Sachs's Jim O'Neill--widely regarded as one of the best market economists in the world--has given our beloved RBA the muther of all plugs. This just reinforces the need for the very composed, dispassionate, level-headed, non-emotive, and focussed analysis of the RBA's performance that is always yielded by yours truly ;-):
"[T]he RBA continues to generally play their cards rather well. Thinking back the past 20 years or so with respect to Inflation Targeting, in some ways, the RBA could be regarded as the most successful [central bank] given how they appear to have chose the right response after each major shock, and of course, the economy has not gone into recession for so long. In this regard, they have clearly signaled another rate hike is coming soon. More interestingly is the situation of the A$. On many occasions in the past when the A$ starts to “ overshoot” on either the downside or upside, while the RBA is always willing to let it go in the direction it seems to need to, often they start to adjust their reserve portfolio , partly as a sign of their views on the value. From what I can gather, they have not shown signs of this on this occasion, and of course, as we get closer to parity, then this will become a point of focus.”
