RBA making interest rates decision before the ABS’ release of crucial GDP data

For the first time since the 1990s, the RBA is making an interest rate decision the day before the release of the ABS’ quarterly GDP figures.

A truly historic event in the 60-year life of our Reserve Bank took place two weeks ago – and which reverberates into this week’s two-day meeting and interest rate decision.

For the first time this century we did not have an RBA rate decision the day before the quarterly GDP figures emerged from the Australian Bureau of Statistics.

For the first time since the 1990s, RBA governor Michele Bullock was not leading the board to make a rate decision that risked immediately, let’s say, ‘embarrassment’, if not outright error, by the GDP figures the next day.

Like, announcing a rate hike – or, as two weeks ago might have had it, leaving the rate unchanged but implying possible future hikes – only for the GDP figures to show the economy was plunging.

As it turned out, the GDP figures DID show the economy struggling.

The economy grew just 0.2 per cent in the December quarter; it grew at just 1 per cent annualised over the December half.

But it did so, only thanks to massive immigration-driven population growth. In per capita terms, the economy went backwards all the way through 2023, shrinking by 1 per cent over the year.

All this flows from the change in the RBA calendar from 11 meetings on the first Tuesday of every month except January, to eight meetings every six weeks.

Under the ‘old’, the RBA met one week after every quarterly inflation figure.

As fighting inflation remains the RBA’s ‘day job’, so to speak, that sensibly – and indeed obviously – had to continue under the ‘new’.

With meetings still on the first Tuesdays of February, May, August and, most iconically of all, Cup Day in November.

But under the ‘old’ the RBA also – not so sensibly – met the day BEFORE every quarterly GDP figure.

And, as I’ve explained over the years, the RBA does NOT get any early ‘heads-up’ on ANY ABS data. It really does see them for the first time when you do (or can, if you choose to log-on).

Under the ‘new’, that’s no longer the case. The RBA will meet AFTER every GDP release in future.

The RBA this Monday-Tuesday gets to think about all the messages from the latest GDP numbers for the first time in meeting history.

But, as a consequence, there’s a new problem.

The latest rate decision – and even more importantly, the RBA ‘rhetoric’ about possible future rate moves – will come just two days BEFORE the latest ABS jobless numbers.

So now the RBA is ‘running the risk’ of talking tough about inflation and interest rates, just two days before the jobless numbers are disturbing if not worse, awful.

That said the RBA will leave the rate unchanged. RBA governor Bullock will have recommended that and the board will agree.

But beyond that, the ‘rhetoric’ gets ‘interesting’. Will the counterfactual discussed still be the possibility of a further hike?

Then it’s on to Thursday morning and the Fed decision – no change – and even more, Fed head Jerome Powell’s rhetoric, so much more crucial for Wall St and our share market.

Originally published as RBA making interest rates decision before the ABS’ release of crucial GDP data