What RBA Governor Glenn Stevens said yesterday:
- Debt levels will not put “significant upward pressure on borrowing costs.
- I think it is a bit hard to claim that as of this moment there is too much growth in the economy so I haven’t really had a serious problem with what has occurred on the fiscal front thus far.
- I would say myself that actually it’s the possibility of very low interest rates for a long period is the bigger contributor to likely asset imbalances. That’s actually an argument I think for making sure that the return towards normal on monetary policy is not delayed.
- Australia borrows in a global market. The long rate in Australia is driven more strongly by what happens in global markets than by what happens here.
- What we respond to is total demand, rather than where it comes from.
What others heard:
The Reserve Bank is highly likely to lift its 3 per cent cash rate before Christmas based on the need to withdraw some of the ’emergency’ monetary stimulus designed to deal with a crisis that now has largely passed. Michael Stutchbury, The Australian
He was very clear that if that spending were cancelled, that is the unspent stimulus, interest rates would result, at least interest rates would remain lower for longer. Helen Coonan, shadow finance minister.
Reserve Bank in no uncertain terms said that if the government spends another $20-$30b it will put upward pressure on interest rates. Senator Steve Fielding.
Clearly some sort of invitation-only parlour game in operation.