From FTAlphaville this morning:
Central bankers can do many things but they should never, ever attempt humour.
To illustrate the point we present the price action in the Australian dollar on Wednesday.
That’s a three year low of $0.9055 against the greenback and it followed a ‘gag’ from Glenn Stevens, governor of the Reserve Bank of Australia.
From the Australian Financial Review:
An off-the-cuff remark by Reserve Bank governor Glenn Stevens sent the dollar down on Wednesday after he “joked” a rate cut was seriously considered at Tuesday’s board meeting.
Mr Stevens’s remark, which a spokesman confirmed was intended to be a joke, was at odds with the rest of his speech, which indicated the RBA was content to keep official interest rates on hold while the falling dollar spurs economic growth.
Here, in full, is the ‘joke’.
As some of you may know, the Reserve Bank Board meeting was in Brisbane yesterday at which we deliberated for a long time to leave the cash rate unchanged.
You can see why people weren’t rolling around in the aisles. In fact there was downright confusion after Stevens delivered the ‘gag’ in his usual deadpan style.
Taking the speech itself, we would view Stevens’ assertion that “no-one can pretend to be able to fine tune this ‘handover’” of growth as being supportive of our call for later rate cuts. There is a substantial caveat though, which is that Stevens was quoted as saying that the Board “deliberated for a very long time yesterday”. This is a puzzling remark, first because it was not in the speech, and was reported on the newswires before the Q&A session was reported to have started. Perhaps Stevens (uncharacteristically) went off-script during the speech, or (again, uncharacteristically) made a casual remark before his prepared remarks began.
Or (again uncharacteristically) made a joke.
Still he who laughs last, laughs longest.
To me this funny (sort of) for another reason. The joke is surely that Stevens should not have been joking, born out by the fact that the dollar has not recovered from the joke.