Working Papers

Peter Costello and Interest Rates

A remarkable story, if true:

Jon Faine on ABC 774 in Melbourne has revealed yet another extraordinarily ill advised conversation between a leading politician and a journalist.

The Treasurer, Peter Costello, was in Faine’s studios in late September and during a break for the news, Faine said to him: “I can’t believe you haven’t called the election to get it out of the way before the cup day interest rate rise.

“He looked me in the eye. He put his thumb down as he sat there in the chair and he said, ‘There will not be a rate rise in November. Take it from me.’

“I said : ‘You might be right, you might be wrong, but you’re prepared to punt on it.’

“And he said : ‘There will not be a rate rise in November.’…

How is it that the Treasurer of the country could so misread the mood of the Reserve Bank Board when virtually every analyst in the country was predicting the opposite?

posted on 08 November 2007 by skirchner in Economics, Financial Markets, Politics

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