Yesterday’s shock decision by the Reserve Bank to keep rates unchanged confounded the pundits who all piled aboard the 25 basis point gravy train in the days and weeks leading up to the decision. It appears only Christopher Joye at Business Spectator and Terry McCrann were brave enough to claim they “picked it”.

So what is their esteemed view now? Did the Reserve Bank do the right thing by holding steady or was more drastic action needed. Crikey asked a group of interest rate gurus what should have happened and asked them to chance their arms on a prediction for the rest of the year.

Craig James, chief economist Commsec:  (prediction: 0.25% rise)

We agree with Terry and in effect he was saying that they’re going to move in February or March and to us it seemed a pretty reasonable thing to pause, sit back and assess the landscape. Working out the timing is always the difficult part, generally economies will end the year at around 4.75 per cent and you’ve got to work out which months they move and when they move is the hard part. When you look across the spectrum, everyone predicted rates would rise but only 5 out of 20 in the Reuters poll expected a further hike in February. It gets down to the fact it was strategic decision of the RBA, that thought it was right to pause after the inflation number and the expected Chinese tightening to slow things down. After three rises in a row the RBA though it was time to sit back and see the economy after the stimulus has been withdrawn.

I think few people would disagree with the Reserve Bank pausing — unless you’re a punter in the financial markets. If you take a longer-term view of these things, it’s neither here nor there.

Stephen Walters, chief economist, JP Morgan: (prediction: 0.25% rise).

We expected a rate hike yesterday of 0.25 – we were clearly in that camp. I don’t think the RBA got it wrong, however. I don’t believe that you can make that judgement yet. It was clear in the RBA judgement that they are not concerned about the economy. There was some evidence of them being uncomfortable, however, with jitters in financial markets. It was clear that they want a bit more time before they make the decision to raise rates.

As for an outlook — the concern is that if the RBA is not sure now, how much wiser will they be in four weeks time? I think they will hold rates for a couple of months but will then raise them more aggressively in the second half of the year than we thought previously.

Saul Eslake, program director, The Grattan Institute: (no prediction)

If I’d been asked I would have thought they would have raised them but I thought they would have been less compelling, as I wrote in a Fairfax article in mid-November and as (Reserve Bank deputy governor) Ric Battellino remarked too because the margin between the cash rate and the rates that people actually have to pay had widened by 1 and 2 percentage points. They had to raise the cash as much as needed to do pre-crisis to go back to neutral. I don’t think people had taken that on board, I think rates will level out at 4.5 percentage points rather than 5.5%. The reason that lots of people got it wrong is that they put more emphasis on the RBA board rather than on the data that came out of the December meeting that most parties suggested  was the at the economy continuing on a very strong pace and not enough weight on the fact they’d done three previous they describe as material. The banks did more than the Reserve Bank after the December meeting that Ric referred to that the Bank placed more weigh themselves on anecdotal evidence that consumer spending may have slowed in December of January or secondly because the Reserve Bank hadn’t mention it before, the continued difficulty in business has had in getting access to credit.

I think there will be two or three more rate rises over the next six months.

Steve Keen, Debunking Economics: (prediction: expected rate rise)

I expected the RBA to increase rates, but since I regarded this as a bad move I’m actually quite pleased that they didn’t do so.

With the three previous rises, it appeared to me that the RBA was returning to its pre-GFC confidence that it knew how the economy worked, and that controlling inflation was the most important thing.  I had hoped that the occurrence of the GFC would have made them less confident on this front.

Yesterday’s decision implies that they do indeed have less confidence in their knowledge about how the economy works, and I see that as a sign of increased wisdom that I applaud. Since standard neoclassical economic theory competely failed to anticipate the GFC, now is a time to reconsider conventional beliefs, and I’m pleased that the RBA does appear to be doing that.

Adam Carr, senior economist, ICAP: (prediction: 0.25% rise)

When the market and every economist was looking for a hike, the real issue is why the RBA got it wrong. Their explanation as to their decision was laughably inadequate. We all know that interest rates will  rise so why did it not happen yesterday?

Looking  forward, we know they are going to hike. If we take a look at the economy, it is going strong, the global economy is firmly on the path to recovery .

As to when they hike? The RBA’s comments yesterday have thrown the market into a bit of turmoil and lots of questions are being asked.