Break in trade storm still leaves job ahead for RBA
For the Reserve Bank, the policy needle is now pointing to cutting rates at its next meeting.
For the Reserve Bank, the policy needle is now pointing to cutting rates at its next meeting.
Economists are now musing about the prospect of an emergency cut by the Australian central bank.
For some time now, it’s been evident that the Australian central bank should move beyond its outdated narrative about stubborn inflation and fully grasp the challenges ahead.
The Reserve Bank’s newly-formed monetary policy board needs to get down to business quickly and debate the merits of an immediate interest-rate cut when it gathers for its first meeting this week.
The big threat to the Australian government’s budget isn’t necessarily domestic but rather the rapidly deteriorating outlook for the world economy thanks to erratic US economic behaviour.
While Cyclone Alfred is a significant threat, the Reserve Bank governor will also be gazing out of her office window to storms brewing in the global economy.
So tentative was the central bank’s first reduction in official interest rates that it begs the question. How much support did the cut actually get around the central bank’s board table?
Inflation has been in retreat, with headline measures now back within target.
Financial markets are already pricing in a rate cut next week, but the reality is the discussion around the RBA table will be tense, uneasy and more finely balanced than most understand.
For a number of years, the Reserve Bank has been operating under a cloud of self-doubt that it should work to throw off.
Original URL: https://www.theaustralian.com.au/author/james-glynn