A sidebar to this morning’s interest
rate rise is that the market will take it as effectively confirming the idea
that the Reserve Bank of Australia
officially unofficially leaks to a select journalist or two. Specifically, the
common belief is that the RBA as a matter of course softens up market
expectations by giving a nod and a wink to the AFR‘s Alan Mitchell.
The other possibility of course is that
the good Mitchell isn’t on a Martin
Place drip, he’s
just better at reading the various tea leaves that the RBA publicly scatters from
time to time.
The problem with this possibility is
that if it were true, any and all of the major money market players would hire
him tomorrow at a multiple of his lowly Fairfax
stipend. A proven ability to correctly
forecast monetary policy is worth serious money. So no, the boys who can put
money where anyone’s mouth is believe RBA officials keep Alan better informed than the rest of the market
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The question then is whether this is dodgy
conduct on the part of our august
central bankers. There are laws these days against public companies providing
inside information to favoured journalists about market-sensitive issues, but
the billions bet on the money market dwarf mere ASX games.
Furthermore, the ambiguity of the
selective leak system can lead to mistakes. It would be far more prudent for
the guardians of our interest rates to publish the minutes of their monthly
board meetings so that everyone can have a fair slap at the chicken.
Alternatively, the RBA should at least
rotate the drip. Governor, we’d just like you to know Crikey’s door remains
open to you.