What we know about the August RBA meeting
We can be pretty sure the RBA will downgrade and dump the taper. I think there’s a chance they say that YCC’s not dead, just frozen. Boosting QE to 6bn per week seems unlikely to me.
Category: AUD
What can the RBA do?
What can the RBA do? Faster QE will take RBA ownership of mid-curve ACGBs to 50%. They should consider buying Ultras and increasing the share of Semis. And rolling YCC to Nov’24.
July RBA minutes set up for QE-taper reversal
RBA minutes confirm that the decision to taper to 4bn/wk was a close run thing & set up a reversal (due to COVID downgrades) in August.
RBA regrets the July taper
The AFR’s John Kehoe reports that the RBA would not have tapered on 6 July if they’d foreseen the lockdowns. I think the RBA will reverse that decision on 3 August. It would be good strategy to remind the market that YCC’s not dead, it’s just frozen.
RBA ‘thesis snaps
Another quarter of weak consumption and a decline of the ABS measure of job vacancies challenges the RBA’s conclusion that there’s no wealth effect form housing & their reliance on the lagging ABS measure of labour demand.
Qld Coal country
In this post I look at the federal election results in Qld. I first look at the two-party-preferred swing, and then at the swing in the Labor primary vote. The closer a seat is to a coal mine (particularly Adani) the lower the ALP primary vote and the larger the 2pp swing to the LNP.
RBA: Double-cut … no pike
The RBA cut 25bps to 1% on 2 July, delivering a rare back-to-back easing. They didn’t, however, drop the sort of hint that would suggest another cut in August.
I’m cold on a July RBA rate cut
I don’t think the RBA will cut their cash rate in July. It would be odd and out of character for a Governor and a Board that has emphasised that importance of the Bank being ‘a source of stability and confidence’ over the past few years.
Five points on the income tax cut debate
Taxes have been growing more quickly than income — so the tax share of the average person’s income has gone up sharply. In this post I lay out the facts about the income tax debate. It’s most about returning bracket creep, and stabilising the tax share of GDP.
What’s right and wrong with Terry McCrann’s Wynx article
Terry McCrann (again) spiked the markets on Wednesday with an explosive article that warned that the RBA could cut 50bps
Australia’s disappearing Phillips Curve
The RBA’s realisation that the NAIRU is a bit lower is a case of better late than never. The data shows that the relationship has been getting flatter at a lower level of inflation for some time.
Lowe locks June … looks awkward
RBA Gov Lowe delivered a speech that was widely interpreted as locking in a 25bps rate cut in June. The
