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."

Tuesday, January 24, 2012

If economists' forecasts are right (chart), we likely get a rate cut in February

Enclosed below is Bloomberg's survey of Australian economists for core inflation tomorrow. The average and median are both 0.5%, which is probably low enough to give the RBA room to cut rates in February subject to revisions to past data and other global economic information. This is also consistent with current financial market pricing. What is interesting about this survey is that there are quite a number of very low estimates: two guys are predicting 0.2%; three are hoping for 0.3%; and one is punting on 0.4%. This is not so odd in pure distributional terms, but these numbers are way below the recent core inflation average of around 0.8%. Looked at a little differently, there is nobody predicting 0.8% or higher. So it seems the smart money is going to be looking for a benign inflation result tomorrow, and, if we can bank that, a good chance of a rate cut in February. I am not sure how folks will react if core inflation somehow prints high.

at 9:13 PM