AFR: Two plus one equals four economists

Under the spectacularly misleading title RBA’s ‘neutral’ stance wipes out big four hike calls for 2019, the AFR today serves up a bitter message from the pulpit for Australia’s big bank economists:

Westpac, NAB, ANZ and now Commonwealth Bank are now unified in their expectation that there will not be an interest rate hike in 2019.

The only problem is not all four had rate hike forecasts. Bill Evans at Westpac, who was not interviewed, has been calling no hikes for years so he has been proven right as the other’s have been proven wrong. Credit where it is due.  That said, it is only a short time now before Bill Evans is also proven wrong as the RBA folds to rate cuts.

At that point the AFR will rightly be able to claim that all economists (except MB and Gerard Minack) got it wrong by seeing rate hikes at all in this cycle.


  1. So many decades of incorrect forecasts and poor analysis, and yet, these professionals are still among the the best paid and most respected in the field of finance. When will the penny drop that neo-classical economics is little more than a fraud?

    RIP Mises

    • This comment might get me banned, but most economists are in the same class as astrologers.
      They have a lot in common – groupthink, use of advanced math and vague predictions.

      Astronomy is a real science, astrology is rubbish, but there seems to be no real science equivalent of economics, built from the ground-up and falsifiable. Perhaps behavioural economics is a start, though.

      • I don’t think your comment would get you banned — there is a broad group on these boards that recognise there is something seriously amiss with modern economics. Even the guys who run the blog and who’ve been schooled in neo-classical economics have acknowledged it.

        Neo-classical economics informs every bit of sh!tty RBA policy. If that isn’t enough evidence then none other will do.

  2. “At that point the AFR will rightly be able to claim that all economists (except MB) got it wrong…”

    And on that day, the sun will also be blotted out by the passage of squadron after squadron of flying pigs.

  3. From what Phil Anderson says ‘there was a time when economics was only based on cycles’ with each commodity having a different bust and boom cycle.

    • China PlateMEMBER

      From what Copernicus said ‘there was a time when astronomy was only based on epicycles’
      He also mentioned retrograde motion, Copernicus not Phil Anderson the cyclist that is. Perhaps he was referring to economics.
      OK OK i’ll stay away for the rest of the day

  4. As an economist who spent many years in both the central bank and banks including running a large team (I’m now on my own) id say it’s not so much economists as the structure in which they operate.

    My incentives – as with MacroBusiness – are pretty well aligned to my clients, the people who pay me. Whereas the incentives for economists working in government and banks are not. Can ANZ’s economists really write critical articles on Chinese policy making? No. Can junior economists in the RBA really challenge their bosses and say “you’re wrong” – they can, but it’s difficult and if done wrong will cost them their career. Can an economist in the Big Four talk down housing when the bank has huge exposures? No.

    The conflicts of interest and moral hazard are endemic to the system. Then If you overlay the difficulty of the job as well, and the inertia of herding cats to get everyone aligned to a view and onboard, it’s little wonder their views are vacuous.

    This is why you buy MacroBusiness or Redward Associates…

    We get it wrong too, but less often and for the right reasons.