Well, you would have had to be a brain-dead economist or analyst to have tipped a rate rise from yesterday’s final Reserve Bank board meeting.
None of the 25 local economists surveyed by Bloomberg tipped an increase, so the brain dead were not among them.
As we know, there wasn’t an increase and the 4.75% rate will be with us into early 2011, and perhaps a bit longer.
The post meeting statement from RBA Governor, Glenn Stevens finished with this commentary:
"Following the Board’s decision last month to lift the cash rate, and the subsequent increases by financial institutions, lending rates in the economy are now a little above average.
"The Board views this setting of monetary policy as appropriate for the economic outlook."
So no rate rises until well into the next year.
The RBA board next meets on the first Tuesday in February and it will have before it the December Quarter Consumer Price Index and employment reports for November and December, plus retail sales for November and possibly December.
Unless there has been an explosion in jobs and a surge in inflation, these figures are not likely to force the RBA’s hand.
AMP chief economist Dr Shane Oliver sees the central bank as sitting on the rate until April at the earliest.
What was notable from the Governor’s statement was the sudden elevation of the euozone’s woes top of the pops, so to speak.
These problems were the first factor discussed in the statement, after drifting down the list in previous statements.
"Since the previous Board meeting, concerns about the creditworthiness of a number of European governments have again become the main focus of financial markets, with a marked rise in sovereign bond spreads for some euro-area countries and an increase in volatility.
"At the same time, recent data suggest that the Chinese and Indian economies have continued to grow strongly and price pressures, particularly for food, have picked up in China as well as a number of other economies in Asia. Modest growth is continuing in the United States.
"For Australia, the terms of trade are at their highest level since the early 1950s, and national income is growing strongly as a result.
"Recent information indicates that, as had been expected, private investment is beginning to pick up in response to high levels of commodity prices.
"In the household sector thus far, there continues to be a degree of caution in spending and borrowing, which has led to a noticeable increase in the saving rate.
"Asset values have generally been little changed over recent months and overall credit growth remains quite subdued, notwithstanding evidence of some greater willingness to lend.
"Employment growth has been very strong over the past year, though some leading indicators suggest a more moderate pace of expansion in the period ahead.
"After the significant decline last year, growth in wages has picked up somewhat, as had been expected.
"Some further increase is likely over the coming year.
"The exchange rate has risen significantly this year, reflecting the high level of commodity prices and the respective outlooks for monetary policy in Australia and the major countries.
"This will assist, at the margin, in containing pressure on inflation over the period ahead.”
"Over the next few quarters, inflation is expected to be little changed, though it is likely to increase somewhat over the medium term if the economy grows as expected."
Later today RBA Deputy Governor Phil Lowe (who is in charge of the economics department) speaks at a forecasting conference in Sydney that will look ahead to 2011.
He will no doubt speak to the statement issued yesterday after the meeting. His speech is entitled "Forecasting in an uncertain world".
Governor Glenn Stevens pops up next Monday at the Senate inquiry into banks.
