Rate Expectations

Bookmakers sometimes refuse to offer odds on a particular horse if it’s seen as a sure thing. So it was recently when a betting agency declined to take bets on the Reserve Bank of Australia raising official interest rates because the outcome was “as close to a guaranteed certainty as possible”.

Media commentary ahead of the first meeting for 2010 of the central bank’s policy-making board was also unequivocal. “RBA to Lift Interest Rates”, trumpeted ABC Radio; “Rates Almost Certain to Rise”, said The Sydney Morning Herald, while The Australian Financial Review chose to look even further into the future to ask whether retail banks would move more aggressively than the anticipated quarter percentage point rise.

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