The dollar is bottoming. Rate cuts are off. The bond bubble is bursting. The economy is recovering. On goes the list of dud calls and hoisted petards from failing economists with today’s outstanding example being Annette Beacher from TD Securities, from The Australian:
RBA Minutes next Tuesday could kill near-term rate cut hopes by highlighting concern that speculative demand for property could create the next macro-economic problem, according to TD Securities.
“The next Financial Services Report is released March 25, and last week the RBA Board members would have been briefed on the highlights,” says TD Securities chief economist Annette Beacher. It is unusual for the RBA policy statement on meeting day to mention the FSR, but in recent years has been part of the discussion in the Minutes.”
“The September 2014 Financial Services Report highlighted that speculative demand in property could create the next macro-economic problem, and that macro-prudential tools could be deployed to manage such demand.”
“However, as we also highlighted last week, APRA appears highly reluctant to engage in ‘headline grabbing’ policy announcements, and in late February stated that managing house prices was not within its mandate.
“Subsequently, we suspect the ‘surprise’ pause (in interest rate cuts) will be explained by the Board members’ reaction to the FSR, debating the risk that (much) easier monetary policy ignites the housing sector to uncomfortable levels due to the absence of powerful macro-prudential tools.
And? With respect, who gives flying %$@!* about the FSR when the economy is deteriorating. Capex is shot. Iron ore is the $50s and falling. Consumer and business confidence is toast. The Government is a mess with no solutions. House prices are rising and that’s all there is.
The RBA only has one lever and it will be pulled, then pulled again, until it is broken. Ms Beacher was horribly wrong about inflation and rate hikes last year and she’s just as wrong now.
Another one bites the dust!
