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@mushroom You're getting him confused. TV is alright. He's not D4Z. He's not arcadefiery. His views move with the data, he's not stubborn.

@stthomasmore The "cash rate to 12%, all else equal" scenario was picked to roughly match what would be required to match his prediction which would be a 60% drop by now. Yeah - not gonna happen.

@jjddww That's fair enough. The CPI weightings are an average over all people, and would be different for the poorest (Not the low-income Americans are likely to be the ones complaining on the AusFinance sub about their grocery bills, though, with reference to the original comment)

@gilbertkatongo Since 50bs is slightly above expectations, The AUD ought to increase if they go 50. And if they go 25, the AUD ought to decrease by about twice to three times as much as it would have increased had they gone 50 This is because interbank futures pricing implies 2-3× higher...

@jjddww 10%+ food inflation isn't good, but it's the total CPI that is a measure of the cost of living, and if food inflation grew it means other categories slowed by more, in order that the total CPI growth slowed. (Other categories of things people actually buy, since the CPI is based on...

@cantgetright No idea! Do we even know if they're seasonally adjusted? Some here have said (I haven't tried to verify) that the index is based on like, all sales in the last year or something like that, which if it were true would mean seasonal corrections wouldn't be needed. It being based on...

@cantgetright The CoreLogic 5 capital city aggregate index is down 1.5% from the peak, and that index is not just Melbourne and Sydney. It's true that the drop is dominated by Melbourne and Sydney, but it's big enough that the national average is down that much.

@suzanne123 Thanks for the link, that's great. No, I hadn't seen it. So they reckon APRA will reduce the buffer to 2.0%, which would buoy borrowing power substantially. Here's what I get for that: Cash rate to 12.0%, income +7%, APRA buffer to 2.0%: -55.6% Cash rate to 3.50%, income +7%, APRA...

@drradiaki18 For sure, there are other factors too which makes any quantitative forecasting exercise uncertain. It is just a dumb simple model about how income and rates affect prices. But I do think income and borrowing power are the dominant factors. Chris Joye makes the point in this debate...

(Note: I made a post similar to this yesterday, which I deleted due to a gratuitous error. Thanks to /@birch for pointing out the mistake!) I did some rough calculations, and as a result I'm becoming more convinced that the forecasts of 10-15% drops in housing prices are pretty reasonable. I...

@justme2017 The market had this at a 30% chance, people shouldn't be surprised. 30% probable things happen all the time!

@steves1980 Markets weren't expecting it, that's the sense in which it was unexpected. Of course they expected high inflation, but it came in a tad higher still. If you know better than the markets consistently, by all means you can make a killing on said markets.

@billyboy Yes, and they were wrong because unexpectedly high US core inflation data came in mid-September. Unexpected economic data will continue to occur in both directions which causes forecasts to be updated. Despite that, I continue to treat the interbank futures as the best forecast we...

@cantgetright Correct. Terminal rate over time is the first chart in the OP: (the line labelled "interbank futures")

@the_morrighan And 7 months ago the market forecast I am citing disagreed with him and said there would be rate hikes. The numbers in the OP are from that same market that people pointed to at the time to show Lowe was wrong.

Interbank futures implied rates have dropped this morning, presumably due to the UK announcing changes to its tax cut plans overnight. Market-implied terminal rate* is 4.06% Expected Oct rate hike is 43bps, equal to a 74% chance of 50bps and a 26% chance of 25bps. Expected Nov rate hike is...

@samerobert Yes, that's right.

@samerobert His prediction is in nominal terms, since the index is in nominal terms

@mawmaw5 If I'm wrong then the ASX page is wrong too. They claim to be taking into account the fractional-month situation too. Are they simply not accounting for this 0.05 difference, maybe? That might explain it - they're comparing the current cash rate target to the market expectation of the...

@mawmaw5 I believe that's factored in - the page I linked to computes probability of a specific rate rise, based on a formula (linked to from that page) that accounts for the next hike only affecting a fraction of the month a contract applies to. All I'm doing is getting the numbers on that...