Henry had spies at yesterday’s
speech
by RBA Deputy Governor Glenn Stevens, which projects continued strength
for the Australian and global economies. He was at pains to point out that this
was not going to be a speech on the state and prospects for the
Australian economy, but nevertheless he did emphasise that in the monetary
policy assessment process the RBA gave a lot of consideration to
conditions and prospects for the global economy. Glenn said the rest of
the world is tightening (US is perhaps back to neutral but Japan only
just beginning) and the rest of the world is overlooked too often in
Australian discussion. Hint, hint.

Henry notes that according to the
yesterday’s Fin Review, there is a list of alternatives for the governor’s gig
that includes Henry’s own PD Jonson along with Martin Parkinson, David Gruen and
David Morgan. The smart money on deputy is a toss up between Ric Battellino (aged 55)
and the much younger turks of Malcolm Edey and Phil Lowe. Henry regards
Battellino as the safer set of hands (more evidence of the baby boomers keeping
the young ‘uns at bay for as long as possible?), with Edey and Lowe hard to split
at this stage.

All that said, Stevens is reported
as having made a polished speech expected of a
governor-to-be.

Henry’s view is that he has made
August a near certainty (even in spite of the data uncertainty over the CPI – a
low number anyway would seem likely to be “looked through” since Stevens said he
had been surprised how little inflation there had been in 2005 and how now the
RBA core inflation numbers [at 2 3/4%] were running on his
expectation).

Meanwhile, the PM’s refusal to
“bone” Cossie (apologies to Eddie Erstwhile Everywhere) has given Cossie
carte blanche of sorts to continue his pressure. Although he knows he is way
behind as preferred leader in just about everyone’s views, he knows being sent
back to the backbench will be a non-trivial decision for the PM to make. In the
meantime, if the PM decides to stay, people will still continue to ask the
question: “well, if you are not leaving now, when are you leaving?”. Staying
on just to thwart Cossie will not bode well for JWH’s legacy (churlish,
self-indulgent), and Henry detects no really viable alternatives on the
sidelines, so while he still meets the dictionary definition of “dark horse”,
Cossie’s position is probably as strong now as it will ever
be.

Read more at Henry Thornton.

Peter Fray

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