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Sporadic 19 September 10 2015
Thursday September 10th 2015
RBNZ Almost Back To Square One
The Reserve Bank met expectations this morning by cutting the official cash rate another 0.25%. Come the end of October they will probably have unwound all of last year’s tightening – thus reversing rate rises for the second time post-GFC. Other central banks like the RBA, ECB, and Riksbank have also reversed rate rises as the post-GFC world is producing far lower inflation than traditional economic models have suggested. those models unfortunately no longer work and as we have warned for over five years now you need to be very careful about paying too much attention to forecasts of interest rates – and perhaps most other economic variables. Build flexibility and resilience into your business operations.
In this Sporadic issue number 19 I take a look at a long list of reasons why forecasting accuracy has gone out the window.