Your correspondent was once very rude about one of Australia’s better institutions though now rather complacent – the Reserve Bank – pointing out in 2012 that making it’s most important decisions (to set the overnight cash rate) each and every day before the national accounts – is … well stupid.
In an early preview of a forthcoming Mandarin column I regret to say that the dose is repeated:
Our own Reserve Bank mistimes its deliberations on its cash rate with exquisite precision, holding it’s board meetings the very day before the national accounts are released. To do so once a year would seem like a misfortune. To do so on every occasion it gets – year in year out – suggests carelessness of an unusually dogged kind.
It puts me in mind of this episode of the Simpsons where Homer electrocutes himself with some shoddy tool he’s using to do some home improvement. “Man, that hurt” Homer yells after some minor disaster. “And now to do the exact same thing again”.
But now a couple of top draw economist/econometricians – Australia’s Adrian Pagan and the US Fed’s David Wilcox have said the same thing though far more diplomatically.
The RBA Board meets on the first Tuesday of each month. As a result, four times each year (though never for a meeting that will involve publication of an SMP), the Board must take its decision based on very old information about the national income accounts data.9 One approach to deal with the awkwardness of the publication calendar might be to move the RBA Board meeting a few days later.
Whooda thunk? So now I hope and expect it will be fixed. All consistent with what might be called my ‘momentum’ theory of the Overton Window.
