Former ANZ cheif economist Wazza Hogan at the AFR:
During the GFC the RBA board was able to cut the cash rate by 400bp, including three 100bp adjustments. In response to the “dotcom” bust and the September 11 attacks the cash rate was reduced by 200bp. The long easing cycle of the late 1990s entailed 275bp of rate cuts while Australia’s last recession saw the cash rate drop by more than 12 percentage points.
Normalising monetary policy also reduces the likelihood of creating imbalances in the economy. This could be an acceleration of inflationary pressures that puts a sharp and sudden upward pressure on interest rates; the “snapback” risk. Or it could be a build-up of private sector debt that eventually unravels in a disorderly manner.
