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, October 5, 2011

Good summary of the probabilities around RBA's next move from top strategist

This is from Ricardian Ambivalence, a highly regarded market rates strategist:

"If we get a low Q3 CPI report at the end of this month, and the unemployment rate heads up to 5.5% in the October labour market report (which covers the month of September), and market measures of inflation expectations continue to decline, their inflation forecast may get low enough for the RBA to begin a rate cutting cycle at their November meeting. If so, i think that it’ll just be a 25bps cut – most probably followed by another in December, and perhaps two more in 2012 … to take cash down to 3.75%...

Personally, I doubt that the RBA will get the evidence they need to lower their inflation forecast by a whopping 75bps in a single quarter (between their August and November SOMPs). Thus, I think the earliest likely quarter for a rate cut is Q1’12. With the Bank having stalled longer, it’s more likely to be a 50bps move – with the end point likely to be 3.75% in Q3’12."