Punting on interest rates for Melbourne Cup day

Friday, 30 October 2015  Media Alerts
This year’s Melbourne Cup day coincides with a far more significant event in the economic calendar. The outcome of Reserve Bank Board Meeting, at 2.30pm AEDT, on Tuesday 3rd November.

"I'm betting on an interest rate cut by the Reserve Bank in a Melbourne Cup week, which will give the economists something to ponder as runners and riders go around the track at Flemington Racecourse in Melbourne just thirty minutes later,” says Tim Harcourt.

He argues that the chances of another interest rate cut when the Reserve Bank of Australia meets next week increased sharply following the release of much weaker-than-expected inflation numbers for the third quarter.

“Core inflation figures, which are closely monitored by the RBA, are much worse than expected. They rose just 0.3% during the quarter and 2.1% for the year. There is a lot of room for a cut in rates to boost the economy,” he says.

Tim Harcourt is the JW Nevile Fellow of Economics at the UNSW Business School, and has been monitoring the economy in the run up to what he is calling the “Melbourne Cup Interest Rate race.”

However, Tim Harcourt says "home owners and market participants will probably be able to enjoy race day without having to keep too much of an eye on the RBA interest rate move, when the bank it makes its monthly announcement. There will be no chance of a raise - just a cut which may put money in the pocket of a punter who has lost their shirt.”

“Indeed - when you are punting on this year's Melbourne Cup, have a bit of sympathy for Australian export businesses who have to make their big bets on international markets in the Asian region, and gamble with exchange rates, which swing with moves of interest rates."

He compares the countries in Asian and Middle East to runners in the Melbourne cup. "If you look at a form guide to Asia, countries vary. There is Ruling Dynasty, representing China. This dynamic new colt has surprised seasoned punters with his ability to maintain a fast pace, year after year. Gust Of Wind is a lightly raced filly that has made rapid progression, representing Taiwan. She is occasionally overshadowed by the Ruling Dynasty, but she’s a tidy performer who has rewarded loyal supporters well over many seasons. There is also Almoonqith, a Dubai visitor, which is a little known but powerful galloper with an industrious approach has revealed new appeal to punters in recent years. Sadly, Archipelago, representing Indonesia, raced last year but won’t take place this year, just as Australia distanced itself from Jakarta. The quest for co-operation with Indonesia overshadows many business connections, but Indonesia is a huge trade partner for Australia.” 

For further comment call Tim Harcourt on 02 9385 3816, 0408 485 479, 

Media contacts: 
Julian Lorkin: 02 9385 9887 
Janine MacDonald: 02 9385 5895 

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