The RBA Board decided to raise official interest rates by 25 basis points today against my, and many other economists, expectations. One wonders if they take pleasure in proving forecasts wrong, or whether they are simply following the cardinal rule of monetary policy - defy expectations.
Unfortunately I think it is the destabilising thing to do, and maintain that we may see this decision reversed in the future. With a housing market waiting to crumble, tourism and education exports fading, commodity prices peaking and inflation already moderating, expect some sullen economic data this festive season.
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