Nov 21, 2012

The RBA versus the new normal of uncertainty

The Reserve Bank is trying to make monetary policy in a difficult period of uncertainty both domestically and globally. Glenn Dyer and Bernard Keane report.

Despite a widespread belief that we will get another rate cut as soon as the December board meeting, don’t bank on that happening as automatically as some think after last night’s speech from RBA Governor Glenn Stevens and the release earlier yesterday of the minutes of the November 6 board meeting. That also seems to be the understanding of currency markets with the dollar remaining solid at either side of $US1.04, where it has been trading for much of the past couple of months.

This comment from the board minutes, “[m]embers considered that further easing may be appropriate in the period ahead. However, at this meeting, with prices data for the September quarter slightly higher than expected and recent information on the world economy slightly more positive, the Board judged that the stance of monetary policy was appropriate for the time being” left economists and others convinced that another rate cut is a “given” and could come as early as the December board meeting (which would then see a repeat of the 2011 rate cuts in November and December).

Free Trial

Proudly annoying those in power since 2000.

Sign up for a FREE 21-day trial to keep reading and get the best of Crikey straight to your inbox

By starting a free trial, you agree to accept Crikey’s terms and conditions


Leave a comment

One thought on “The RBA versus the new normal of uncertainty

  1. Robert Groom

    The RBA Board and Glenn Stevens live in some parallel universe where they think because global economic conditions have improved marginally then that is a good enough reason not to make another immediate rate cut here. The RBA should be cutting aggressively and promoting growth as much as possible. If you want improvements to productivity start with the high real cost of money!

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details