Reserve Bank Instructs Our Future Economists

On Wednesday 27 February, 65 Somerset College Economics students joined 260 students from other Gold Coast schools to listen to the Reserve Bank of Australia talk about the Australian economy. In January 2018 at this very same seminar, the RBA made some predictions about what would transpire in the Australian economy throughout 2018.

We have listed each of the RBA’s 2018 predictions below, and indicated whether they were right or wrong based on the information provided to us at the 2019 seminar.

• Interest rates will remain at historical lows due to low wage growth and low inflation. WRONG! Yes interest rates have remained at historical lows and inflation is still low, but wages have begun to grow in the later part of 2018.
• The Sydney and Melbourne housing markets will not decline. WRONG! House prices in Sydney and Melbourne have fallen by 8 per cent since December 2017.
• Unemployment will stay a little higher than the RBA would like in 2018. WRONG! Unemployment has continued to fall. In fact, it has fallen so low, that there is now upward pressure on wages.

So the question is, “Should you trust an economist”? We certainly think so!

A big thank you must go to Mr Oman, Mr Evans, Mr Moore and Mr Juniper for organising the day.