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."

Tuesday, April 24, 2012

Credit where it is due...

While a lot of analysts got February, March and April wrong, and a low core CPI print this quarter was widely anticipated (including the downside surprise), some have been much closer to the mark about the ultimate direction of rates since around the second half of last year.

These include Bill Evans at Westpac, Tim Toohey at Goldman, Brian Redican at Macquarie, and even my Labor buddy, Stephen Koukoulas (who used to contribute to this blog under a pseudonym while he was in his old job working for Gillard). And my inflation-forecasting "strategist" (cannot be named) got his point estimate and distribution right, although I reckon this was one of the easier quarters to do so.

But, as I noted above, calling it correctly month-to-month has been a much more difficult task. And while a "cut" in May after the RBA jawboning and now the low CPI is certain, actually predicting what the RBA does is more challenging. For example, as I discuss in detail below, much speculation will brew on whether the RBA goes 25 or 50. Right now, I am with the former.