The strobe on the Pascometer is flashing again. Yesterday afternoon a parade of Australia’s best commentators joined the call for an August rate cut. But the most convincing signal for a cut was the Pascometer‘s counter-contrarian position that the RBA will hold with gusto:
I’ve previously already argued the subtle mix of “on one hand, but on the other” in the last RBA board meeting’s minutes looked more like an emperor penguin’s stance than either dove or hawk.
Remaining in the aviary, eagle-eyed Crikey writer Glenn Dyer swooped on the introduction of a new word in the RBA’s description of its existing stimulus, “substantial”. Along with highlighting the currency move’s potential inflation impact, that was what was different about this month’s final board minutes paragraph explaining the decision to sit pat.
…The same article led with the importance of the Australian Bureau of Statistics last week quietly revising its building activity figures for the December quarter – revisions that could lift 2012-13 GDP growth to more like 3 per cent from the 2.5 per cent it was running at in the March quarter national accounts estimates.
Along with smaller revisions to earlier quarters, the final count for the financial year’s national accounts could be considerably better than when the galah flock was screeching doom in the wake of the March quarter accounts – you know, all that stuff about “we’re in a recession if you don’t count the bits that are growing”.
…The expectation that housing will lift is starting to be met. It looks like it would take another shock, not more of the same, to upgrade that “substantial” monetary stimulus to “very substantial”
It is wondrous to remove the cover plate and observe the inner workings of the mechanism. A finely tuned device, the Pascometer detects the issue of the day, calculates what the smartest people in the room are saying, sifts the detritus for evidence against it, and outputs a precisely cherry-picked counter-contrarian ream whirring with abuse that is as entertaining as it is wrong.
