Working Papers

RBA Tightening Expected on Tuesday

Financial market economists are unanimous in expecting a 25 bp tightening from the RBA at Tuesday’s Board meeting, according to a Reuters poll taken today.  February inter-bank futures are giving a 69% probability to a 25 bp tightening, while iPredict has an implied probability of 87%.  Markets seem to be underpricing a tightening relative to the punditocracy, perhaps reflecting the same concerns driving weakness in equity markets.

posted on 29 January 2010 by skirchner in Economics, Financial Markets, Monetary Policy

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Looks like the market was (more) right (or less wrong) than the experts once again!

Posted by .(JavaScript must be enabled to view this email address)  on  02/02  at  02:42 PM

Yes, although the Reuters poll did not allow for the expression of uncertainty.  Still, most economists would have given a tightening a very high probability if asked.

Posted by skirchner  on  02/03  at  03:47 PM

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