Roll up for Chicken Chalmer’s incredible RBA circus


What a circus Treasurer Jim “Chicken” Chalmers has made of the RBA.

It would be laughable if it were not for its importance to households.

Have a listen to TD Securities:

We expect a 25bps rate hike; the case for a hike is strong. Q3 Headline & trimmed mean inflation overshot RBA forecasts (largely on domestic factors), property prices are within a whisker of all-time highs, retail sales have firmed and u/e rate is closer to record lows than the Q4’23 3.9% RBA f/c. Poll (+25bps hike): Bloomberg: 21/24, Reuters: 34/39.

That said, the meeting is a ‘line ball’call, OIS priced ~65% for a hike. With no signs of a wage spiral, the Bank may wait for the next quarterly CPI print to confirm inflation pressures are ‘material’, threatening RBA’s forecast for CPI to be <3% by Q4’25.

We expect the RBA statement to be neutral, reiterating ‘further tightening may berequired’ but stopping short of lining up a Dec hike.

The Bank may decide to hold off from hiking for two main reasons:1) 30% of households were deemed to be ‘at risk’ of mortgage stress (Roy Morgan Survey) and 2) the impact of prior rate hikes has yet to filter through.

Less important but possibly relevant is Gov. Bullock operating without a full bench, with no Deputy Governor and Chief Economist to provide alternatives on monetary policy.

Even if the RBA decides to keep the target cash rate on hold, it’s unlikely the Bank can step aside and omit ‘further tightening may be required’ given how elevated measures of inflation are.

Nobody knows what is coming today because it is chaos in the RBA institutional structure, communications, political context, and economic description.

To sum up:

  • Bullock’s ascension was deeply compromised and her early speeches equally so in terms of political bias.
  • The new L-plate governor has declared that she should hike but she has deeply compromised institutional authority to do so.
  • Chicken Chalmers has said she should not hike and robbed Bullock of the authority to not do so.
  • The RBA’s credibility will collapse if it does not hike.
  • It may be abandoning the economy for its own sake if it does.
  • Bullock spent much of her recent parliamentary testimony defending fiscal settings. All this week, Chicken Chalmers has sold her out by attacking the same.
  • The economic case for tightening is 50/50. The economy is very weak and inflation will keep coming down. Yet Alboflation is out of control.
  • Nobody will even mention immigration, the primary source of overheating.

I can’t recall such an RBA mess. And it is amid the angriest bond markets in decades meaning higher borrowing costs for the unwary.

If I had to guess, I’d say the bank will hold because the chaos makes it too hard to move with authority.

I am more confident about what should happen to the most incredibly inept treasurer I have ever seen.


He should be sacked.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.