Tuesday, May 02, 2006

Rates up - 17 of 21 economists wrong

The RBA has this morning announced that interest rates are rising .25% to 5.75% - up for the first time since last March.

So there go the goodies in next week's Costello Budget Mk XI. What Costello gives with one hand, the RBA takes out via higher interest with the other. The decision is a sign of a bank that doesn't want to be raising rates after the Budget - and risk provoking a backlash against the Treasurer's next platform to lever himself into the Lodge.

Not only has the bank pre-emptively melted away those anticipated Budget giveaways, they've also snubbed most of the economists lobbying for a continued pause in rates. Bloomberg surveyed 21 economists yesterday - and only four picked the rise.

3 Comments:

Blogger Niall said...

Conclusion? Were the economists wrong? No, the RBA is.

4:03 pm  
Blogger Hugo said...

You may be right, Nial. But these economists are hardly all munificent bystanders, are they? their big business employers have a vested interest in this, which renders their "opinions" more like lobbying.
Guess the RBA gave them a prod, along with homeowners.

4:33 pm  
Blogger Niall said...

Well, the business economists are self-interested, the media ones less so. But I'm not sure that the big banks are too upset about highter interest rates...

8:44 pm  

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