A very good analysis of Australia's labour market dynamics

From the guys at Ricardian Ambivalence again. My pal, the original R.A., has had some very good calls of late. He got December 'easily'--too easily for my liking. He was with me in February and April. And he got 50 in May on the basis of some (rarely seen) serious empirical research around where the optimal cash rate should really be. R.A.'s views are a little too fluid and market-centric for mine, but he is one of the best going around. His core inflation forecasts are second to none. Absolutely top-of-the-pops. I've gotta say, his greater-than-fifty-percent May call still puzzles me, though. I could not get there on his analysis alone. I still struggle to see how he did. After the event, the one thing I can pin as persuasive is the assumption around the bank pass-through, and the net cash rate change since November. Maybe I under-weighted this. But then I keep coming back to Peter Martin and David Uren, and ultimately the staff recommendation. If that was the preferred internal position, then the logic--insofar as it mirrors RBA staff logic--was right. And this argued in favour of 25, and not pre-judging bank pass-through, net interest margins, and hence RoEs. But then he is paid to predict  outcomes. And he has been getting them right.