In the compartmentalised world of information constructed by former US defence secretary Donald Rumsfeld, this is a week for “known knowns” rather than the more common “known unknowns” in the Australian economy.
It is also an important week with most eagerly anticipated Reserve Bank board meeting (Tuesday) since the last one and the release of latest measure of economic growth in the first quarter (Q1) National Accounts (Wednesday).
The market has pencilled in a 0.25 percentage point cut from the RBA as a “known known”.
It has been sitting at a 100 per cent certainty for pretty well the past fortnight, although lessons on assumed known knowns can drawn from a betting agency paying out on a Labor win ahead of the result last month.
Roman statesman, general and philosopher Pliny the Elder would probably chip in with “The only certainty, is nothing is certain” — a quote that sadly doesn’t cut in these days demanding absolute, black and white certainty and opinion.
The “unknown unknown” is what happens next? Is it a one-and-done cut? Unlikely.
Two cuts before the end of the year is the market favourite.
Four cuts into next year, taking the official cash rate to 0.5 per cent, is gaining traction in the market, but still an outlier.
The big French investment bank Societe Generale split the difference and had a punt on three cuts; two in pretty quick succession for domestic issues and third deep into next year on a gloomy global worldview.
“The cut in June and 3Q 2019 would