MOAR cuts coming...
An endlessly fascinating subject that deserves way more time than I can commit to it today.
If you have a spare half hour to kill then the House of Representatives transcripts from the other day are a ding-dong ripsnorter of a read.
Especially jump to the section wherein Andrew Leigh immediately ripped into the Reserve Bank over its lack of commitment to hitting its inflation and full employment mandates.
A tasty morsel:
Source: Australian Parliament
Yikes.
The benefit of hindsight is 20/20 vision, of course, and it's become clear that with an ongoing credit squeeze policy has been tighter than it might have been.
This seems to be a difficult concept for some people to get their heads around, but market consensus doesn't lie in this regard.
The breakeven inflation rate implied by the Aussie bond market has continued its collapse post-election, to levels not previously before seen.
Source: Westpac
There have been signs of a few internal rumblings at Martin Place, but today's Board Minutes confirmed that there's been a clear shift in the line of thinking:
The path of least regret suggests a couple more cuts are likely to follow over the months ahead, and market pricing does too.
