Category Archives: economics

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

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

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

Q1’19 CPI makes strong case for 7 May RBA cut

The slow pace of inflation in Q1 makes a very strong case for a 25 bps reduction of the RBA’s policy rate on 7 May, to 1.25%. The key trimmed mean inflation measure increased 28bps to be 1.6% higher over … Continue reading

Posted in AUD, CPI, economics, monetary policy, RBA, Uncategorized | 6 Comments

Q1’19 CPI, the RBA and May

The case for the RBA to cut their cash rate at their 7 May meeting has been beaten up by the RBA’s own views on the GDP data, but I still think that the data makes a decent case for … Continue reading

Posted in AUD, CPI, economics, monetary policy, RBA | Tagged | 4 Comments

IMF downgrades, RBA to follow

The IMF today downgraded global growth 20bps to 3.3%yoy (lowest since GFC), and said that the risks are skewed to the downside. Among Australia’s key trading partners, Chinese growth was bumped up 10bps to 6.3%yoy; Japanese growth -10bps to 1%yyo; … Continue reading

Posted in AUD, economics, monetary policy, RBA | 6 Comments