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, July 25, 2012

Goldman: RBA takes August rate cut off the agenda

It will be fascinating to see how economists' August interest rate calls change following today's CPI release. A simple decision-rule: a core inflation print of 0.5% or higher and the RBA is likely to hold. Core of less than 0.5% and a cut is a possibility, but still not guaranteed. Here is the always thoughtful Goldman Sachs on Governor Stevens's landmark speech yesterday:

Today's speech was the final opportunity for the RBA to signal its intentions on policy prior to tomorrow's 2Q2012 CPI report and the August rates meeting. The conspicuous lack of discussion on the inflation front serves to reinforce our view that the central bank is not looking to use tomorrow's expected benign prices release as the catalyst for further policy easing. Indeed, arguably a rate cut at that meeting would stand somewhat at odds with today's quite upbeat assessment of the outlook by the Governor...With significant policy stimulus now working its way through the system and major tax reform only recently initiated, we think it will be some months before the RBA has a clean read on economic momentum