Guy Debelle, Deputy Governor of the Reserve Bank of Australia
The speech is titled: Global Influences on Domestic Monetary Policy
- No automatic reason to follow rate hikes abroad
- "No significance" should be read into fact neutral rate was discussed at July policy meeting
- Board covers policy-relevant issues at most meetings, on this occasion it was the neutral rate
- Says cash rate set at level appropriate for domestic policy objectives
- Says global pressures mean Australian rates lower than they would otherwise be
- Some tentative signs global pressures are abating, but evidence inconclusive
- Central bank stimulus abroad has put upward pressure on A$
- Says a rising A$ lessens benefits of faster global growth for australia
- Global, domestic factors have both contributed to a decline in Australia's neutral interest rate
- Says neutral policy rate likely to remain lower than in the past
- Says risk aversion since GFC contributed to fall in neutral rate, may reverse in time
- However, other factors including lower potential growth rates, could be more permanent
- Says reasonable amount of uncertainty about where the neutral rate is
- Estimates neutral rate has fallen by around 150 bps since 2007
So, Debelle trying to wind back the comments from the Minutes re the neutral rate being 3.5%.
Keystone Cops this lot.
AUD lower:
Out of interest, here is the RBA website on (some of ) what it is the RBA is supposed to do (bolding mine):
The specifics of the RBA's mandate rest on the provisions in section 10 of the Reserve Bank Act 1959 requiring the Bank to 'ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia' and that its powers are 'exercised in such a manner as, in the opinion of the Reserve Bank Board, will best contribute to: (a) the stability of the currency of Australia;
Check out an AUD chart of the past few days. Fail.
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Full text of Mr. D's speech: Global Influences on Domestic Monetary Policy
Debelle in Tour de France mode
