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, January 25, 2012

TD Securities: "Higher underlying CPI rattles confidence in a February cut"

TD Securities always-excellent Annette Beacher comments after today's inflation data:

Higher underlying CPI rattles confidence in a February cut. Core inflation stickier than expected...

A higher than expected underlying CPI report for end 2011 takes some of the certainty out of our forecast 25bp rate cut for the February RBA Board meeting. The AUD firmed to $US1.05 and 3yr bond yields added 10bp after its release...

We still expect a cash rate reduction of -25bp to 4% at the February 7 RBA Board meeting. Had underlying inflation softened to the extent that we anticipated, we had a near-100% conviction of this view. Now with inflation a little sticker than we expected, we have a 70% conviction, and co-incidentally the OIS probability of -25bp is also closer to 68% [from nearly 90% before].