OK, inflation. What is the landscape looking like? Most economists are expecting a jump in the trimmed mean (the average once all the volatile bits are taken out) and are hoping it comes in at 0.8% or lower for the quarter.
If inflation comes in at 0.9% or higher, it will mean that inflation is coming in a lot higher than the RBA was anticipating (it had forecast it at 0.6% for this point in the cycle) and so if it is 0.9% or higher, then a rate cut next week is off the table, (and the conversation about will it raise rates, begins anew).
The unemployment rate is rising, which is something the RBA wanted, because it is stuck in the thinking that it is “too tight” to manage inflation, even though inflation dropped while unemployment was low. That does not fit the models, so the RBA and all those very employed, highly paid people making decisions on this, get quite uncomfortable when unemployment is lower than they think is correct.
It is very rare that they remember that they are talking about people. People who are made to subsist on below-poverty line welfare payments, because we punish them for taking one for the country and making it easier for RBA board members to sleep at night. (Yes this bothers me and it should bother you too, so no, I will not be ‘objective’ about people’s suffering because it makes the models look better)
2 Comments
Thanks Amy for yet again saying the quiet part out loud. I am so sick of people who are unemployed being the punching bag for 'everything'. Whilst I am too old and tired to get on my soapbox again about the ills of capitalism (and the world in general), I am always grateful for your insight and input. I hope you are well supported and that you are able to disconnect sometimes xx
Thank you for pointing out the horrible logic the Reserve Bank uses to manage inflation: What we need is more unemployed suffering people, so the rest of us are comfortable! The very least they could do is have a Reserve Bank charitable fund to support the hard working unemployed