Capital economics on the Reserve Bank of Australia and the hot topic of quantitative easing:
- The experience from other central banks that have launched QE is that they only did so when the economy was in recession, inflation was negative or the unemployment rate well above its long-term average. None of those conditions are currently present in Australia.
- we expect the unemployment rate to ... settle around its average over the last decade
- Meanwhile, there are two developments that have reduced the odds of the RBA venturing into the realms of unconventional policy .... rebound in house prices will remove an important drag on inflation .... More importantly, the banks have started to ease credit conditions