What Jack Nicholson Knew About Forecasting Errors

Forecasting anything, let alone something as complicated as the economy, is fraught. Stretches of decent growth and low inflation that look, in retrospect, like happy days, can be upended by unforeseen events. Covid, the descent into recession and the sharp rebound are just a few examples. Errors, unfortunately, are an unavoidable part of trying to map the future.

Everybody’s favorite contemporary villain is the Reserve Bank of Australia. Like global peers, the RBA has made its share of mistakes. Because most mortgages are tied directly to the benchmark rate, the pain from tightening is felt quickly, as is the joy from easing. Everybody has an opinion, some of which lack any sense of history and tend to be argued with a certainty that doesn't exist. Usually missing is a sense of perspective — and a bit of humility.