Monday 3 June 2019

Surely the RBA will cut rates today

The RBA will cut rates today.
If they do not then Lowe should resign after he signalled this in a recent speech.

( He is the governor. I do member one time I was asked whether the RBA would cut a long time ago and I said no. The reason being Ian McFarlane had obviously briefed all three economic editors at the time , Alan Wood, Michael Stutchbury and Ross Gittins. They all had articles on why the RBA would not cut. The only problem was they did cut. Almost every market economist was made to look a goose.)

As Ricardian Ambivalence has shown nothing has come up recently that the RBA did nor know in their May meeting.
The only reason they did not cut had to be the election. Showing again Phillip Lowe is no Glenn Stevens.

There are two problems however.

1) it won't make a great deal of difference. Official cash rates are already 1.5%.
2) It means they have very little in the locker if something unexpected occurs like a recession

This is why Lowe has recommended the government adopt a fiscal policy with more stimulus than at present. ( It is stimulatory at present)..

We will get two cuts this year which will leave the official cash rate at 1%.

When Scott Morrison said if you vote Labor you will get a weaker economy he was right. I voted ALP and we have a weaker economy!!

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