Opinion

Did the RBA just do the right thing? It's very hard to tell

Imagining that central bankers have magical powers obscures a lot of other important policy conversations.

Richard Holden and Greg Kaplan

Nov 3, 2020 – 3.47pm

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The Reserve Bank of Australia did exactly as it signalled and markets expected by cutting the cash rate to 0.1 per cent and expanding its bond-buying program on Tuesday.

Now that the RBA is getting very close to having no ammunition left it’s a good time to reflect on what the bank can achieve, and, more importantly, what we should expect from it.

Richard Holden is Scientia Professor of Economics at UNSW Business School. Connect with Richard on Twitter.

Greg Kaplan is a professor of economics at the University of Chicago.