The last time the RBA board met most economists said an interest rate cut was a definite.<\/p>\n
As you would remember, they were proved wrong.<\/p>\n
Six board members ended up with the majority vote, with only three wanting to pass on a cut (that means only three to convince this time around).<\/p>\n
We have more data to give the board confidence that a cut would be prudent but The Motley Fool’s chief investment officer Scott Phillips has erred on the side of caution.<\/p>\n
His justification?<\/p>\n
\u201cIt\u2019s a parlour game\u201d, he said.<\/p>\n
\u201cPundits,\u201d as John Kenneth Galbraith once said, \u201cforecast not because they know, but because they are asked\u201d.<\/p>\n
Scott said economists is \u201cat it best when it explains\u201d and \u201cat its worst when it tries to pretend it can predict.\u201d<\/p>\n
\u201cLast time, the market thought the odds were 95%-plus that we\u2019d get a rate cut,\u201d Scott said.<\/p>\n
\u201cAnd what did the RBA do? It held rates steady.<\/p>\n
\u201cOops.<\/p>\n
\u201cAnd today? The implied odds are essentially 100 per cent.<\/p>\n
\u201cNow, the market might be right. We\u2019ll find out at 2.30pm, today.\u201d<\/p>\n
The finance expert noted that the RBA has said “essentially nothing\u201d new about interest rates for the last couple of meeting and since then there has been \u201cweak GDP, strong employment (and blessedly low unemployment) and falling inflation\u201d.<\/p>\n
Three out of 34 experts from Finder\u2019s analysis predicted a cut, with similar justifications, and they could be right.<\/p>\n
Scott stopped short of making any predictions himself.<\/p>\n
\u201cI\u2019m not saying the market will be wrong about today\u2019s rates call.<\/p>\n
\u201cBut I\u2019m not saying that it\u2019ll be right.<\/p>\n
\u201cWhat I am saying is that prediction is hard.\u201d<\/p>\n
One thing is for sure, we will know in 15 minutes.<\/p>\n","protected":false},"excerpt":{"rendered":"The last time the RBA board met most economists said an interest rate cut was a definite. As…\n","protected":false},"author":2,"featured_media":63215,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,40750,46,7707,10080,40749],"class_list":["post-63214","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-cash-rate","tag-economy","tag-graham-cooke","tag-interest-rate","tag-michele-bullock"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/63214","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=63214"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/63214\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/63215"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=63214"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=63214"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=63214"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}