The two local mainstream press journalists here in Australia who were nearly certain the RBA was going to cut yesterday, Terry McCrann (of the Sun Herald) and Peter Martin (of The Age/Sydney Morning Herald) are out with pieces today in a bit of a post-mortem of the Reserve Bank of Australia decision yesterday.
Firstly, McCrann (in brief):
- the RBA made the cut and made it right at the start of the year because it believes at least another cut is likely. It wanted to set the scene and give itself maximum flexibility
- I hasten to add, this does not mean another cut is certain
- Any decision is always made at each meeting, month-to-month, dependent on how a huge range of factors unfold
- But right now, it sees a world in which at least another cut is likely.
More here (ungated): One down and what’s next?
And, Martin:
- Disconcertingly, the bank’s statement provided no guidance as to whether it expected to cut again. The omission was deliberate
- The bank will assess what happens as a result of this cut and then decide. If the cut does no more than encourage bigger housing loans and further push up home prices, it’ll leave it at that. If it encourages spending and investment it might decide that it’s worth doing again.
More here (ungated): Economic weakness, not strength, drove the Reserve Bank to cut
