Editor’s Picks 11 August 2016 at 23:33 GMT

RBA rate cuts won't work in a low inflation nation

The Sydney Morning Herald
Remember the one about cutting interest rates to lower the dollar? Tell that to the Aussie when it was trading above 0.77 cents. It's just like the one about the Reserve Bank cutting rates again to create inflation. It hasn't. It doesn't. It won't. The RBA's single tool, monetary policy, is impotent. We are a low inflation country in a low inflation world. The cash rate being cut can't and won't change that. Consumers have become immune to softer policy. No business is being stimulated to hire an extra worker or buy a new machine because rates are 25 points lower. With last week's trimming having negligible impact, RBA governor Glenn Stevens spelt out the danger of the government continuing to rely on monetary policy for stimulus.
Read full article at The Sydney Morning Herald


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