Well, regular readers will see a striking commonality between my views on the RBA's recent decisions and those attributed to Professor Warwick McKibbin in the AFR today:
One of Australia’s top economists, Warwick McKibbin, wants the Reserve Bank of Australia to raise interest rates today to crimp accelerating economic growth.
Professor McKibbin, who was a member of the Reserve Bank board until a few months ago, made the recommendation as a member of the Australian National University’s so-called shadow RBA board.
“Last meeting they shouldn’t have cut rates,” Professor McKibbin said. “They were not reading the boom in this economy as I was reading it; that there was an enormous amount of strong investment.”
He also said the bank had moved last month in anticipation of what it thought might happen in Europe.
“If you’re always adjusting to what you think is going to happen, you’ve got the problem that if it doesn’t happen, you’re in the wrong place,” he said...
HSBC Australia chief economist Paul Bloxham said interest rates were now “clearly stimulatory” and as the dollar was no longer appreciating, upside risks to inflation were building. With Europe looking to be muddling through its crisis, “there would be an increasing chance that rates will need to be lifted over a 12-month horizon,” Mr Bloxham said.
