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A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Sep 04 2014

Australia’s Dilemma: Growth or Inflation

ECRI has just updated its Australian Future Inflation Gauge (AUFIG). The value of this forward-looking gauge lies in its ability to predict cyclical turns in Australian inflation.

Against the background of weaker Chinese economic growth, a mining-induced economic slowdown, federal budget cuts, a strong Australian dollar, and an unemployment rate that hit a 12-year high in July, the Reserve Bank of Australia (RBA) is keeping the official cash rate at a historical low for the 13th consecutive month, marking the longest period of stability in interest rates in more than eight years. However, with headline inflation near the top end of the RBA’s preferred range in the June quarter, the RBA is facing a policy dilemma.   

In our latest update to the AUFIG, we provide insight into the future trajectory of Australian inflation, which may determine whether the RBA will be able to maintain its present monetary policy stance.

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The Fear of Wages Is Dead

ECRI August 29, 2014

A keystone of current market complacency is the growing conviction that, with wage growth flagging, the Fed will not hike rates sooner or faster than expected. More