Category Archives: monetary policy

Fed set for -100bps — starting with -50 in July

The Fed spiked the market with dovishness this morning. Taking the market implied rate for the end-19 fed funds rate down ~18bps to ~1.6%. I think the Fed is likely to match the market: delivering a 50bps cut in July, … Continue reading

Posted in FOMC, Inflation, monetary policy, Uncategorized, USD | Leave a comment

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

Clarida: King of the Doves?

Vice Fed Chair Clarida gave a very interesting speech entitled Sustaining Maximum Employment and Price Stability on 30 May. It was interesting not only because it laid out two paths for rates cuts in 2019, but because it strongly suggests … Continue reading

Posted in FOMC, monetary policy, Uncategorized | Tagged | 1 Comment

Fed staff lose hope on inflation

Hidden inside the minutes to the Fed’s 30 April meeting is an alarming paragraph that suggests Fed staff have grave concerns about inflation expectations. The staff’s forecast for inflation was revised down slightly, reflecting some recent softer-than-expected readings on consumer … Continue reading

Posted in Bond Market, FOMC, monetary policy, USD | 3 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

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

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