From the Wall Street Journal on Reserve Bank of Australia Governor Lowe in parliament today
Said the RBA becoming increasingly uneasy about the potential for inflation to jump in the U.S., fanned by the country's "problematic" fiscal expansion.
The background (in case you need reminding) is the huge fiscal stimulus kicking in in the US at this time of the cycle
- U.S. economy doing well
- very low unemployment
says Lowe "it is the time of the cycle that should be back to budget balance...building insurance" … said the U.S. was doing exactly the opposite.
"One can't rule out the possibility that the Federal Reserve will have to withdraw monetary accommodation more quickly than currently projected, with possible disruptive consequences in financial markets"
Article in full is here, may be gated
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Lowe is right to be concerned. There is no doubt this will end in tears, the question is only when.
