RBA rate cuts - Australian economy "going to hell in a hand basket. It really isn’t"
A report on the RBA and Australia from Deloitte Access Economics latest business outlook. This via the Australian Financial Review..
(link, may be gated)
RBA rate cuts in June and July are not because the bank is worried about a sharp economic downturn
But because the RBA wants to create more jobs, raise boost wage growth and it now realises the economy's "speed limit" was higher than previously thought
- "The Reserve Bank could have made this decision any time in recent years, but because it has decided to do it now, at a time when the economy is slower, everybody assumes that the economy must be going to hell in a hand basket. It really isn't,"
- "Consumer confidence and business confidence is falling because the RBA hasn't explained itself as well as it could."
Goes on to outline the 'Heaps of stimulus' in the pipeline:
- election result reduced policy uncertainty
- tax cut
- interest rate cuts
- reduced pressures on bank funding costs
- a loosening on lending for housing by the regulators
- lower Australian dollar
(we've been over those before at ForexLive, ICYMI:
- Morgan Stanley on the AUD - support from the three pillars of Australian economic stimulus
- RBA rate cuts, government tax cuts are 'more than enough' stimulus