I meant to say there are legitimate arguements about Fed over reach in the US….

I dont think we are there yet in Australia…but its getting close. Reserve bank powers must be kept in check.

i dont think we are there yet in Australia. But fed powers must be checked.

We can only guess their deeper motives for their determination to continue raising rates, but surely it cannot be put down to consumer price inflation, which the already strong dollar has nipped in the bud.

Could the RBA be attempting to tackle the property bubble? If so, this is a very crude method of doing so. Property is artificially inflated due to flawed legislation, and will only properly be fixed by reigning in negative gearing.

Perhaps, more ominously, the RBA can see the conditions for a global hyper inflation scenario building. America and the UK have been printing money at breakneck pace for over a year now, and we really don’t know whether this policy has been ineffective, or merely delayed in effect by bank hoarding.

The fantasist in me also considers this could be part of a Western gambit, where said banks are acting as a dam that will be exploded next year in order to abruptly re-align the current global imbalance between creditors and debtors. It would also serve to de-peg the Yuan from the US dollar, which is a long held American goal that has met with little success through diplomatic channels.

With global markets charting along a trajectory reminiscent of the great depression’s false recovery, 2010 is sure to be full of surprises. Will a little wiggle room on interest rates help much if the world comes crashing down around us?