As a kid, I enjoyed a good Muppet Show, but the Muppet Show we’ll see tomorrow when the latest inflation data is released will be far less edifying.
Just watch as a conga line of Labour Party propaganda peddlers attempt to twist what is published, fudging the nature of the findings to demand a rate cut as soon as possible.
Prediction: The new monthly inflation figure will fall below three percent for the first time in a long time, probably around 2.7 or 2.9 percent.
Since that is technically within the Reserve Bank’s two to three per cent target range, just look at the mounting calls for an interest rate cut ahead of the election.
Demand will come from both partisan think tanks and politicians.
But not everything is as it seems if we only listen to these hackers spreading their messages.
The inflation figure they will refer to is the headline result, not the underlying number.
What’s the difference? The headline figure can vary in monthly results, while the underlying figure cannot.
RBA Governor Michele Bullock to discuss headline inflation figure due out tomorrow
And that underlying figure will be higher than the upper end of the Reserve Bank’s target range.
That’s why rates shouldn’t be lowered: because Australia still has a high inflation problem.
The circus of clowns (or puppets) you will hear in the media and on social media will ignore the impact of energy rebate manipulation in the latest headline data. They will also ignore the underlying figure if they think they can get away with it.
An overall inflation figure artificially pushed down by carefully designed energy rebates is of no use.
Don’t just take my word for it, that’s what Reserve Bank Governor Michele Bullock is saying too.
Someone who examined the intricacies of monetary policy in his graduate studies at the London School of Economics.
The core inflation figure strips out the volatile outliers contained in the headline inflation rate, giving us a truer reflection of what inflation actually looks like right now.
Think of it this way: If a natural disaster occurs that reduces food supplies to such an extent that the price of some products temporarily spikes, that will cause the overall inflation figure to skyrocket.
The core figure irons out that temporary volatility to give a better indication of where inflation really is.
It works by removing the top and bottom 15 percent of price changes, known as the trimmed average.
The Reserve Bank only takes this figure into account when deciding whether to raise or lower interest rates, and pays no attention to the headline figures, which can fluctuate due to weather events or acts of political deception.
But the Muppet Show will start tomorrow anyway. The usual fundraisers disguised as independent economists will be doing their thing, trying to convince the government.
And they will be joined by partisan politicians untrained in the fine art (or is it a science?) of economics, as they proclaim victory in the “war on inflation.”
But all this is just a deliberately false narrative, because the inflation figure that matters will still be too high.
Treasurer Jim Chalmers will hail the new figure as a triumph, perhaps even suggesting his critics were wrong.
But he will also signal that there is more work to be done, and this warning is precisely why the Reserve Bank should not cut rates any time soon.
Because the real problem of inflation remains, and once the energy rebate issue is finally over, the headline figure will rise again, moving closer to the trimmed average.
Treasurer Jim Chalmers will claim tomorrow’s inflation figure is a victory
This is because, as the Reserve Bank has pointed out, state and federal governments are spending too much and, with a federal election around the corner, that is unlikely to change.
The distortion arising from partisan think tanks claiming expertise has become an inflation-fuelling industry of its own these days.
Filled with staff who have little to no training in the fields they claim to be experts in, and even less lived experience to go with it.
Real independent economists – those with PhDs and professorships not aligned with agenda-driven organisations – will overwhelmingly see beyond this interpretation and cautiously explain why Australia is not in the same situation the US is in right now.
That’s why their rates are going down and ours aren’t.
And tomorrow watch these same puppets moan about the fact that at today’s Reserve Bank board meeting interest rates will not be lowered.
Their partisan slogan tomorrow will be that they should have, with the false narrative that it was a “missed opportunity” by Gov. Michele Bullock.
What garbage is this Muppet show going to be? Maybe the ones I saw as a kid were garbage too, but as a kid I just didn’t know any better.