Australia’s neutral interest rate has pancaked

Advertisement

The RBA amusingly reckons Australia’s neutral interest rate is 3.5%. I’d like to see it try to get there. The excellent Damien Boey at Credit Suisse calculates it at 1.1%:

Re-visiting the neutral rate with impaired monetary transmission

We have just published an article, re-visiting our understanding of the neutral rate in an environment characterized by impaired monetary transmission (attached). Our key conclusions are as follows:

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:
Cancel at any time through our billing provider, Stripe
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.