The AFR has today’s ruminations from the Shadow RBA Board:
Official interest rates are more likely to be higher in 12 months’ time, according to a group of prominent central banking academics and economists.
The group urged policymakers to keep the official cash rate on hold at 3 per cent when it meets on Tuesday.
…The nine-member shadow board – which includes former RBA policymakers Warwick McKibbin and Bob Gregory – sees a 50 per cent probability that the cash rate will need to be higher in a year’s time.
“It seems more likely that slow recovery in the real economy will continue, with interest rates being shifted towards more neutral levels,” said Melbourne Business School associate professor Mark Crosby.
…University of NSW economics professor James Morley said the apparent improvement in the housing market supported a need to raise the cash rate in the medium term.
Jeffrey Sheen, head of economics at Macquarie University, said: “Asset markets are leading the recovery in Australia, suggesting that previous cash rate cuts are working.”
And there you have it again. Property killing industry, at least in the current context. It would be interesting to know Bob Gregory’s view given his recent medium term mega-bearishness.
I’d be prepared to bet that the Shadow board will be wrong.