Tuesday, October 05, 2010

Money market left "standing in the rain"

Rock gods Vanda & Young know what it's like.

Here's how Sean Keane of Credit Suisse describes what happened:

"The RBA didn’t exactly leave the market bride at the altar of monetary policy today, but with 19 out of 25 economists picking a hike and the market implying close to an 80% probability of a hike it wasn’t far off. The former Shadow Governor aka known as journalist Terry McCrann appears to have finally met his Waterloo, with his confident forecast that the Bank would hike 25bp today being his first miss after a serious of remarkably insightful calls. So certain was The Australian newspaper edition of a rate hike that they actually published the ready to go rate hike story at 2.30pm, having to hastily recall it minutes later. Today’s rate pass was a big surprise."

The question is why. Chris Joye thinks it was deliberate.

I don't discount that. There were odd atmospherics around today's meeting, some of them orchestrated by the Bank itself.

Dylan captures the mood:

Ballad of a Thin Man

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