Michael Pascoe writes:
The possibility of the RBA board
deciding to actually do something at today’s meeting has given the financial
markets the most fun they’ve had in ages. That’s what happens when the RBA only
moves rates once every year or two.
The markets are punting hard that the
RBA will announce a 25-point interest rate hike tomorrow even though most
economists still think they’ll no nothing again, as The Smage reports.
The whole process though again raises
the question of whether the RBA officially leaks to the AFR‘s economics editor
Alan Mitchell, as the key reason for the market getting ahead of the official
tipsters is the belief that Mitchell has inside knowledge.
It all becomes particularly coy when
the AFR itself can run a story on Thursday about the market moving its bets
towards a rate hike with these lines:
But the real clincher were local media reports from journalists perceived by
the financial markets as RBA insiders. These said that the central bank now had
a clear case to raise rates at its board meeting next week after the March
quarter CPI data on Wednesday showed a spike in inflation.
“Over the past 24 hours we have seen a sizeable shift in expectations
for near-term RBA policy,” Treasury strategists at National Australia Bank
said in a morning note.
“Timing is always difficult, but such a large increase in the
first quarter inflation rate opens the door fairly widely for a move after next
week’s board meeting. Noted RBA watcher, Alan Mitchell from the AFR,
also thinks a rate rise next week is on.”
“The big $A move overnight came with the release of various newspaper
articles from leading financial and economic journalists that suggested the
chance of a rate rise at next week’s board meeting was material. Both the
short-term money markets and the $A were impacted,” ANZ’s head of strategy
Warren Hogan said in a morning note.
Mitchell is on an official unofficial drip from Martin Place, I am
jealous. If he’s not, it’s a joke – a
bit like the US
weather bureau steadily increasing its warnings about the severity of
approaching winter because of the fervour with which the Indians are
stockpiling wood, which they’re doing because they’re listening to the