Monday, July 06, 2009

Somewhere, someone is very certain about how the Reserve Bank is going to move Tuesday

Someone is very sure about the outcome of tomorrow's Reserve Bank board meeting.

Late on Thursday, the day that briefing papers went out to the members of the Reserve Bank board, Centrebet received an inquiry about accepting an enormous wager.

The caller, who left his name with staff at the Alice Springs-based bookmaker, wanted to know whether it would accept three-quarters of a million dollars on the board voting for "no change" on Tuesday.

The bet would have been way in excess of anything Centrebet has ever previously been offered on a non-sporting contract...

"Off the scale," said spokesman Neil Evans.

The biggest previous bet placed on an economic outcome was $90,000 in two lots of $45,000 on the previous Reserve Bank board decision.

"With a potential bet of this size, it is actually quite frightening when you are talking about decisions that may or may not be known," Mr Evans said.

Asked whether Centrebet staff suspected the caller had inside knowledge, he replied, "you can read into it what you like, but you would just about have to know what's going to happen at Tuesday's announcement."

The timing of the call, after 5.00 pm Thursday, lends weight to those suspicions. Thursday is the day the Reserve Bank's senior staff finalise their recommendation about what to do with with interest rates and send it out to board members.

Until Thursday there is no recommendation on rates to leak.

Although board members are free to reject the staff recommendation and have done so at least twice since the onset of the global financial crisis, rejections are normally rare.

Centrebet told the caller it was prepared to accept the $750,000 bet but would pay out only part of it at the quoted rate of $1.08 per $1.00, paying out the rest at a lower rate.

A payout of $1.08 for the full amount would have netted the caller $60,000.

As it happened the caller was unable to come up with the money and never laid the bet. Centrebet staff say they have no doubt his inquiry was genuine.

The biggest bet actually made on the outcome of tomorrow's meeting is worth $25,000. It will earn the punter $2000 if the board votes to keep rates on hold.

Published in today's SMH and Age