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Tuesday, April 24, 2012
What were economists forecasting *before* today's inflation data?
It is interesting to see the rate forecasts well before today's not-entirely-unexpected downside surprise to inflation (a risk flagged by many analysts following the weak NZ CPI, weak import prices, and weak producer prices). Consensus was for a 25bps RBA cut in May (red line) with only one projection of 50bps. Consensus is almost certainly still 25, although there will be a few more folks in the 50 camp. The average forecast was putting weight on the possibility of two cuts before year-end, but was not completely there. You can see my "cheat sheet" of what to expect from the RBA based on different core CPI outcomes below this chart too. The top two rows are the ones to focus on...