After describing Wayne Swan's speech as a "near perfect application of textbook economics", the dovish ALP economist, Stephen Koukoulas, has confidently predicted an RBA rate cut next week. Koukoulas has repeatedly argued that not cutting in February was a bad policy error from Australia's central bank (regular readers will recall that I forecast the February hold, which shocked other observers).
Recall also that it was Koukoulas who revealed that "many" RBA Board members apparently want to cut rates, but were being thwarted by a recalcitrant RBA staff. Then we had Terry McCrann conceding yesterday--for the first time (and after many previous denials)--that the RBA Board has indeed rolled the staff on several occasions, and a sensational new prediction that even if the RBA staff present an "unchanged" rate recommendation next week, they will be over-turned by the doves on the Board. All this after a 4% plus fall in the Aussie dollar since the last meeting! Close ALP acolyte, Koukoulas, who has frequently forecast a 3.5% cash rate by June, says on his blog:
The February interest rate cut will likely be announced next week, on Tuesday 3 April. Arguably, the RBA should be cutting rates again next week (that is, taking the cash rate to 3.75%)...It is likely to take the cash rate below 4% in the months ahead.
