From the forex market’s peripatetic Alan Kohler on any rate cut:
The Sydney real estate market surged again in June, although falls in other cities meant the national average declined slightly, and the sharemarket had its best July in six years.
…Self-funded retirees are being forced into riskier and riskier assets to try to add some meat to the three veg on their dinner plates, so the Governor and his colleagues can do their macroeconomic duty. But it’s not working.
And in the absence of any other ideas, the RBA will keep cutting until it can cut no more; then, presumably, it will print.
To not cut the cash rate tomorrow will be to invite a US80c dollar, rendering the May cut entirely pointless and “complicating” (as the RBA has been putting it for five years) Australia’s transition from mining to services.
And the disheartening thing is that those around the table know that unless the US economy starts picking up again, the 80 cent dollar will probably happen anyway, no matter what they do. It’s out of their hands.
RBA cuts have delivered an 18 cents lower dollar than otherwise, Alan, and you might want to whine about it on behalf of your steadily dying readers but that 18 cents is the difference between throwing the last our non-mining tradables offshore and not. More cuts will see it lower as the carry trade loses its meaning.
