Recent last-minute adjustments mean you can't be 100 per cent certain of these things but the greatest likelihood is that at its meeting tomorrow the Reserve Bank board will decide to cut the official interest rate by another 1 percentage point.
Most business economists polled by AAP are expecting a cut of 0.75 percentage points, while the money market itself is expecting 1.25 percentage points.
The former's too low whereas the latter looks a bit odd. Average the two and you should be right.
Almost all the indicators we've seen for the world economy show it weaker than was apparent a month ago. Real growth in gross domestic product during the September quarter has been negative for all the major developed economies.
The monthly partial indicators we've seen so far for the December quarter look weaker again.
World commodity prices have weakened further since the Reserve board's last meeting. So have sharemarkets.
Turning to the Australian outlook, not much has happened since then to change the picture. Friday's figures for the growth in credit to the private sector show it holding up, just as the labour force figures show employment holding up, but this is probably the calm before the storm.
Last week's seemingly strong figures for intended capital expenditure by business next year shouldn't have too much weight put on them. All the non-official business surveys show investment intentions coming down in the past six months.
More broadly, the National Australia Bank's index of business conditions fell further.
When we see the national accounts for the September quarter on Wednesday they're likely to show very weak growth, with the December quarter likely to be just as weak - notwithstanding some boost to retail sales from the October stimulus package (with more to come in the March quarter).
And in view of the volatility of the quarterly national account figures, when you're expecting an outcome just on the right side of zero, getting one just on the wrong side would be quite easy.
Be sure that, should we get a small negative on Wednesday, there'll be a lot of fuss in the media and a lot of people waiting for the second shoe to drop when we see the December quarter accounts in early March. By then you'll be tired of hearing the R-word.
But although running two successive quarters of declining growth would worsen the atmospherics - very important at a time like this - escaping them won't stop growth from being very weak, weak enough to cause a significant rise in unemployment.
All this helps explain why we can expect another "decisive" cut in the official interest rate tomorrow. A cut of 1 percentage point will lower it to 4.25 per cent - equal to the lowest it's been in modern times.
The Reserve regards its present level of 5.25 per cent as "neutral" - neither restrictive nor expansionary - so a cut of 1 point would take it unequivocally into expansionary territory.
Why such a further big cut? Because it's clear the economy is weakening and because minimising unemployment is a more pressing priority than continuing to bear down on inflation.
- Because inflation pressure is dissipating, however long it takes this to show up in the inflation figures.
- Because monetary policy (the manipulation of interest rates) has always sought to be pre-emptive, to react to forecasts of what's coming down the track without waiting until it has actually happened.
- Because there's nothing to be gained by hanging about and feeding out rate cuts a little bit at a time.
Monetary policy is always about influencing confidence and expectations in the desired direction, and right now the best way to attempt to steady confidence is to cut rates in generous, attention-grabbing licks. Continued…
