With so many people getting it wrong about the Reserve Bank’s surprise hike in interest rates, an easy response may be not to shoot the messenger but to hire one.
Borrowers were among those caught on the hop, lulled by media reports to expect that the central bank would pause again in lifting rates, if they hadn’t peaked already.
Investors, who had estimated the risk of a hike as minimal, will likewise be tallying losses.
As it happens, recommendation 10.5 in the wide-ranging RBA review was a call for the appointment of a “chief communications officer” to give bank executives “a richer understanding” of what stakeholders – the public included – need to know.
Surely, such a person might have helped us better anticipate yesterday’s rate rise?
Sign up for Guardian Australia’s free morning and afternoon email newsletters for your daily news roundup
Don’t bet your mortgage on it, said Warren Hogan, chief economist of Judo Bank, and one of the minority of economists to forecast Tuesday’s cash rate lift to an 11-year high of 3.85%.
“You’re not going to get any more information from a chief communications officer,” Hogan said. The recommendation was “one of the more hilarious parts of the review” since central bank governors would inevitably have PR primacy.
Hogan, who said the cash rate may rise another 50 basis points to 4.35%, said that there was always going to be “a lot more instability” in messaging as the RBA neared the end of its rate cycle. For many of the first 10 increases – a record run that ended with April’s pause – the question was more the size of the hike, not whether one was coming.
The consequence was that every line of new data is now examined more intently, with economists and the media inevitably amplifying its
Read more on theguardian.com