Category Archives: AUD

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 in July. Even an opposition surprising us all by behaving responsibly is now not going to stop — at the … Continue reading

Posted in AUD, monetary policy, RBA, Uncategorized | 2 Comments

Australia’s disappearing Phillips Curve

The RBA’s realisation that the NAIRU is a bit lower than they had thought is a case of better late than ever. The data hasn’t lent much support to it for most of this decade. The chart below shows that … Continue reading

Posted in AUD, economics, Labour Market | 9 Comments

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 market now has a ~90% chance of a 25bps cut priced in for the June meeting — with a follow … Continue reading

Posted in AUD, economics, Labour Market, monetary policy, RBA | 5 Comments

RBA’s labour market (cut) test is met

The April employment report revealed a slackening of the labour market — and is probably enough to get a 25bps rate cut in June. The headline unemployment rate rose ~14bps to 5.20%, with March revised up ~2bps to 5.065%. Don’t … Continue reading

Posted in AUD, economics, Labour Market, monetary policy, RBA | 5 Comments

Two points on WPI

The Australian Q1’19 Wage Price index again printed at 0.5%q/q (2.3%y/y). This is the 11th print in the ~0.5%q/q ballpark since 2015 — which is to say that it’s been ~0.5%q/q about two thirds of the time over the past … Continue reading

Posted in AUD, economics, Labour Market | 4 Comments

There goes the employment bull-case

I must admit to being a bit stunned by the RBA’s May SOMP. There were a number of elements that strained credibility — but in particular i felt that the labour market sections were a stretch. But, as ever, the … Continue reading

Posted in AUD, economics, Labour Market, monetary policy, RBA | 3 Comments

Terry explains RBA’s May statement

RBA Shadow Gov. Terry McCrann has published (what looks to be) a backgrounded story explaining the RBA’s post meeting statement. Good. Thanks Terry / RBA; we need it. Terry explains that: “The RBA will cut its official interest rate if … Continue reading

Posted in AUD, RBA | 3 Comments

RBA holds; bring on Lowe-flation

Against my expectations, the RBA left their policy rate at 1.5% today.  My main lesson from all this is that Gov Lowe doesn’t care much for his 2.5% inflation target. How else can we interpret leaving policy on hold with … Continue reading

Posted in AUD, CPI, economics, Labour Market, monetary policy, RBA | 3 Comments

Financial Stability and Mortgage dynamics

My argument for a May rate cut by the RBA basically boils down to the observation that inflation is very low and that there’s no financial stability reason not to cut — plus the judgement that the very low pace … Continue reading

Posted in AUD, Banks, Housing, monetary policy, RBA, Uncategorized | 6 Comments

Inflation and Monetary Policy — redux

My call that the RBA would cut rates in May was originally a little speculative — but following the Q1’19 inflation data, and weak credit data, I now think that it’s very solidly grounded in vanilla macro. First of all, … Continue reading

Posted in AUD, economics, monetary policy, RBA | 10 Comments