NEWSFLASH! In September I will join The Conversation as its Business and Economy Editor. I have been honoured to work at The Age for the past ten years, originally alongside the legendry Tim Colebatch, and for the past four years as economics editor in my own right.

At The Conversation, my job will be to make the best thinking from Australia's 40 univerisites accessible to the widest possible audience. That means you. From the new year I will also write a weekly column.

On this site are most of the important things I have written for Fairfax and the ABC over the past few decades. I recommend the Search function. The site is a record for you, as well as me.

I'll continue to post great things from The Conversation and other places here, and also on Twitter and Facebook. Enjoy.

Friday, August 01, 2008

It's on - this month or the next

News Limited's Terry McCrann spelt out his view this morning.

Macquarie's Rory Robertson has arrived at pretty much the same conclusion:

"One suspects that recent mortgage-rate top-ups by major lenders and their resort to "credit rationing", on top of weak local and global economic data, and the sharp recent turndown in commodity prices, have forced the RBA to think very hard about a lower cash rate sooner rather than later.

The RBA's published plan always has been for a "soft landing".

Another policy-induced recession would reflect a major miscalculation, a major embarrassment the RBA would prefer to avoid.

I expect the RBA will cut by 50bp.

There is an apparently widespread view that lenders may not follow an initial 25bp cut by the RBA.

A 50bp initial cut would reverse the various mortgage-rate "top ups" - some expected, some not - by the major lenders' since January.

There now is a real momentum towards an RBA cut sooner rather than later, a momentum that will only grow if next week we see further weakness in ANZ job ads and a further deceleration in employment growth in the former boom states of Queensland and WA.

I'm not a big buyer of an RBA cut next week (August), but I wouldn't bang the table and say it can't happen."