You can forget about US dollar parity for the Australian dollar. In his speech and in the Q&A yesterday, Glenn Stevens made it quite clear that current levels of the dollar are far too high and the RBA’s patience runs out at 95 cents or below. Bizarrely, this has largely been ignored by the Australian media so we have to turn to MNI to understand our own monetary policy:
In a speech in Hobart, Stevens said, “In either nominal or real terms, the cash rate is well below ‘normal’ levels, and comfortably below even the mooted lower ‘new normal’ levels.”
“Moreover, we still have ammunition on interest rates – we have not got close to the zero lower bound that has afflicted some other countries,” he added.
