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."

Wednesday, November 16, 2011

AFR's Mitchell agrees: RBA will only cut once (in Nov) and is not planning on more, unless...

The AFR's respected rates watcher, Alan Mitchell, clearly agrees with my arguments in the posts below, suggesting the RBA's November decision did not conform with pure economic logic, but rather was more a tactical insurance/political exercise:

"That is not an economic outlook [the RBA's forecasts] that obviously demands another rate cut. Indeed, as the minutes make clear, the outlook did not even demand this month’s rate cut. The board could easily have waited to see how events unfolded."

He further makes clear that more cuts are not currently part of the RBA's game plan, although we may get them if things go awry:

"The Reserve Bank of Australia has made it clear that it has no plans for the interest rate cut that Julia Gillard clearly wants unless economic circumstances change. The minutes of its November board meeting, released yesterday, leave no doubt that, in the absence of a new bout of economic weakness, the government would have to make very large cuts to its spending to justify a further reduction in interest rates in the near term."