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Monday, 2 December 2019

Glynn: RBA should cut

December meet

James Glynn at the Wall Street Journal has been ahead of the curve all year, and reckons the RBA should cut in December:


Retail conditions are by all accounts (anecdotal and otherwise) woeful - perhaps approaching the worst in a couple of decades - construction is slowing markedly, and consumption is floundering. 

If the economy is seen to be overheating and inflation accelerating - which seems a remote possibility - then the cut could always be reversed.

The media coverage has been curiously critical of the government, but usually lets the Reserve Bank off the hook very lightly.

Ross Gittins joined the pile-on again today in suggesting that Governor Lowe should go and deliver a lecture to the Prime Minister about his Budget.

For real? It was only early this calendar year that the RBA was still forecasting 3 per cent growth and the next move in rates being up!

Indeed, they still are forecasting a return to 3 per cent growth by 2021.

More likely the bank's housing/consumption models need tweaking, and still are underestimating how many construction workers and tradies are being politely asked not to return after Xmas.