I step away from the macroeconomic commentary for one minute and
suddenly all the papers are stuck on the same subject. Interest
The past week of financial commentary has been filled with
guesstimates of what the Reserve Bank of Australia might do
Now, Ill admit, they arent the most interesting subject.
But there I was last week, poolside at a Bali resort, when I
It didnt matter which site I flicked too.
They were all talking about the same thing.
It stumped me. Its not often that the financial rags are in sync
Yet here they were, chewing over and over about what might
Slow news day, maybe?
Or, more likely, it had finally dawned on them.
The Aussie economy is not okay.
Central bank out of touch with the
So why all the fuss?
Gross domestic product data.
Yep. That precious number we get each quarter that tells us how
well the Aussie economy is doing.
Or in this case, not doing.
You see, the September data drop showed that our GDP came in at
0.3% for the quarter. Which was half the expected 0.6%.
Taking our annual economic growth rate down to 2.8%.
It fell way short of market expectations.
And when I mean market expectations, I really mean that all the
economists surveyed by Bloomberg tipped a median increase of 0.6%
for the quarter.
However, the reason why the GDP was a hot topic is because it
was a right punch, left hook market beat up.
You see, the June quarter data was 0.9%. So, not only was
September one-third of that figure, but all the professional market
forecasters got it wrong.
And the data was all the more topical because of what the
Reserve Bank of Australia had said only 24 hours before the data
In a crowded room, the RBA had confidently told the audience
they expected our annual economic growth rate would remain at
Well, well, well.
First the economists, now the central bank.
Do you know what this reveals?
It tells us exactly how out of touch with reality the RBA is.
And just how clueless the market experts really are.
The problem here is this tells us that industry professionals
have completely misread the tone of the market.
That, perhaps, our own central banks statements of monetary
policy each mon...