For the last year or two, I have written about the need for the RBA not to use "key media commentators" as communication devices that the market prices off, and which utterly undermine the authority of its Board to independently determine monetary policy. I have explicitly called on them to wrong-foot Terry McCrann in particular, who has historically moved the futures market by very significant margins based on his interest rate calls before the RBA Board has even had an opportunity to meet to resolve a decision.
Investors claim that McCrann has never been wrong one week prior to a Board meeting. All of that changed today. The RBA well and truly punted into the stands its historical practice of pre-briefing key journos, as McCrann was proven wrong for the first time ever. I noted to one friend before the meeting today that it was rather telling that none of the other big-name commentators--Mitchell, Gittings or Stutchbury--had come out with their typical pre-meeting pieces predicting a decision. It was just Terry. So taken in isolation, this is a positive governance development. And it is already having an impact. One of the most respected economists going around, Kieran Davies, comments:
"As an aside, note that the surprise decision today potentially signals a change in communication strategy by the Reserve Bank. In the past, the Bank has been fond of guiding the market via indirect signalling via the media. That hasn’t been the case this month, but it is not clear whether the Bank has permanently closed this channel."
