Some of Australia’s most prominent bank economists have been lousy guides to where the Reserve Bank is going with interest rates.
’s declaration that interest rates would remain at historic lows until “at least 2024”.
Of the 40-odd economists regularly surveyed by Bloomberg for its monthly economic survey, AMP Capital’sare among the most cited. And both have been lousy guides to where the Reserve Bank is going.that the cash rate would peak at 1.25 per cent. In July, he thought the peak would be reached by November at 2.6 per cent. In January, with the cash rate at 3.1 per cent, he thought the RBA had only one more increase left. He revised this estimate 50 basis points higher on Tuesday.
“We’ve all struggled to call this tightening cycle correctly, but it’s very clear now why the RBA needed to go a lot earlier than they did,” Aird says. “And the risk of recession now is very real.” But what independent observers think the Reserve Bank should do is of less use to deeply indebted homeowners than guidance about what it’s actually going to do. The primary point of bank economists, if it isn’t marketing, is to predict the latter and not to opine on the former.
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