It is fairly clear that the Australian economy is softening.
It is fairly clear that there is not one but two structural changes occurring in the economy – mining and disleveraging of households.
It is fairly clear that inflation around the globe and in Australia is moderating.
It is also fairly clear that monetary policy, the blunt stick that it is, is being used by the RBA only to tune the economy in aggregate.
Fair enough you might say but today’s Statement that accompanied the interest rate decision is once again a very rear vision mirror style of thinking.
Sure the RBA reiterated that in aggregate the economy is going to be close to trend yet they talk about structural change and the fact that output in the economy has slowed.
I’m not going to get on my high horse or have a rant because the RBA just isn’t listening – they know they need to ease but like old generals they are fighting the last war. Clearly the 5% CPI print in 2008 has scared them badly or why else would they say in the Statement:
At its next meeting, the Board will have the opportunity to reassess the outlook for inflation, taking into account not only data on demand and output but also forthcoming information on prices.
I’m happy to stand corrected but I don’t think I’ve ever seen something so overt from them about the next meeting and the parameters.
And the Wordle cloud bears out my old general analogy – just look at what jumps out at you when you look at the statement like this:
Where is John Monash when you need him.