...Hogan, an outlier forecaster, who got it right last year on RBA's move, better not get it right this year.
...central banks now have to weigh out if inflation is a bigger demon or the prospect of recession driven by money getting too tight and expensive. The only possible way to defeat inflation is to crush demand, which means recession. It is a heavy price to pay. Deflation is worse than Inflation, provided its not runaway inflation. RBA to lift cash rate to 5.1pc, says top forecaster Michael ReadEconomics correspondent
Apr 26, 2024 – 5.00am
A resurgent domestic economy and sticky inflation will force the Reserve Bank to do a U-turn and increase its benchmark interest rate three times this year to 5.1 per cent, Judo Bank chief economic adviser Warren Hogan has warned.
After several months of hotter-than-expected data, Mr Hogan has jettisoned his forecast for the RBA to stay on hold until early 2025 and then deliver a rate cut.
Instead, the veteran economist now expects 0.25 of a percentage point rate rises at the RBA’s August, September and November board meetings. That would take the cash rate to 5.1 per cent.
“Everything points to the fact that 4.35 per cent isn’t the right level for the cash rate,” he told The Australian Financial Review.
Mr Hogan was the nation’s top economic forecaster in the Financial Review’s first annual ranking of economists in 2023, being the only one of the 29 surveyed analysts to predict the RBA would raise the cash rate five times last year to 4.35 per cent.
