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Comments on: A 75 basis point cut on the cards? http://www.tvhe.co.nz/2008/09/19/a-75-basis-point-cut-on-the-cards/ The Visible Hand in Economics Sat, 18 Oct 2008 23:39:41 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Italiak1 http://www.tvhe.co.nz/2008/09/19/a-75-basis-point-cut-on-the-cards/#comment-2512 Sat, 18 Oct 2008 23:39:41 +0000 http://tvhe.wordpress.com/?p=1193#comment-2512 Thank you for valuable information.

]]> By: RBA cuts 100 basis points « The visible hand in economics http://www.tvhe.co.nz/2008/09/19/a-75-basis-point-cut-on-the-cards/#comment-2511 Tue, 07 Oct 2008 08:01:56 +0000 http://tvhe.wordpress.com/?p=1193#comment-2511 […] the start of the recent freeze in credit markets a 75 basis point cut by the RBNZ seemed highly unlikely – but possible. Now a 75 basis point cut is looking […]

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/09/19/a-75-basis-point-cut-on-the-cards/#comment-2509 Tue, 23 Sep 2008 19:55:54 +0000 http://tvhe.wordpress.com/?p=1193#comment-2509 “I really like the idea of an index on funding costs with the RB’s forecasts. We need some sort of independent, robust measure of that figure. Right now it’s all so anecdotal and deniable.”

Indeed. Ultimately, I think they could make up some financial conditions index that includes the interest rates they are interested in specifically, and then show the index at each round. With the talented econometricians they have I’m sure it would be no big deal to whip one up.

That’s the thing that makes us all a bit nervous though – they could make up a graph that would illustrate their point, but they aren’t. Could they have attempted it and seen that it didn’t illustrate the point they wanted to make? Hopefully not.

]]> By: Bernard Hickey http://www.tvhe.co.nz/2008/09/19/a-75-basis-point-cut-on-the-cards/#comment-2510 Tue, 23 Sep 2008 05:13:37 +0000 http://tvhe.wordpress.com/?p=1193#comment-2510 Matt
I really like the idea of an index on funding costs with the RB’s forecasts. We need some sort of independent, robust measure of that figure. Right now it’s all so anecdotal and deniable.
cheers
Bernard

]]> By: A 75 basis point cut on the bcards/b? | WTF - When There Is Nothing More To Say http://www.tvhe.co.nz/2008/09/19/a-75-basis-point-cut-on-the-cards/#comment-2505 Fri, 19 Sep 2008 13:02:39 +0000 http://tvhe.wordpress.com/?p=1193#comment-2505 […] Matt Nolan wrote an interesting post today onHere’s a quick excerptRecent credit market uncertainty has seen the funding cost for retail banks rise significantly. It is possible that the impact of the 50 basis point cut in the official cash rate on September 11 could be more than wiped out. b…/b […]

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/09/19/a-75-basis-point-cut-on-the-cards/#comment-2506 Fri, 19 Sep 2008 03:55:37 +0000 http://tvhe.wordpress.com/?p=1193#comment-2506 “If RBNZ saw this last bit of mess coming when they made their 50 point cut, I’ll owe them an apology.”

If they had framed the issue appropriately maybe – however, even if they had perfect foresight, their framing of the problem was terrible (although their head economists did do a good job of explaining it to other economists 😉 ).

Ultimately, the Bank better be willing to lift rates again if funding cost pressures ease – which is why I would prefer some measure of financial conditions that they could explicitly target in a situation like that (in order to provide transparency).

]]> By: Eric Crampton http://www.tvhe.co.nz/2008/09/19/a-75-basis-point-cut-on-the-cards/#comment-2508 Fri, 19 Sep 2008 03:28:24 +0000 http://tvhe.wordpress.com/?p=1193#comment-2508 Of course, since they framed it as “frontloading the easing” rather than “attempting to maintain neutrality in the face of an oncoming storm”, I have doubts.

]]> By: Eric Crampton http://www.tvhe.co.nz/2008/09/19/a-75-basis-point-cut-on-the-cards/#comment-2507 Fri, 19 Sep 2008 03:27:20 +0000 http://tvhe.wordpress.com/?p=1193#comment-2507 I’d love to know what sort of cut would be consistent with general neutrality.

If RBNZ saw this last bit of mess coming when they made their 50 point cut, I’ll owe them an apology.

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