Alan Mitchell, the economics editor of the Australian Financial Review, makes the case in weekend edition that RBA interest rates are “almost certainly too low”. He sees nominal GDP growth of 9.5% for the period 2010-2011.
Another interesting in Mitchell’s piece (which sits behind a pay wall, alas) is his view that a Greek debt default is inevitable and that European officials are just trying to postpone the inevitable until the banking system is strong enough to absorb the eventual loses.
It’s an interesting theory but one that is difficult to trade given the open-ended tiem frame for that eventually to play out…
Talk of strong growth and higher rates are doing the Aussie no favors today. It is consolidating losses just above 0.8700, down nearly a cent and a half on the day amid wide spread risk aversion.
