It should read banks and AFR at war with RBA, via Chris Joye:
With only two or three rate cuts left in the Reserve Bank of Australia’s kitbag, and a best-case scenario involving banks passing on half these changes to borrowers, debate is intensifying around whether the central bank will embrace quantitative easing (QE) more rapidly than markets expect.
A fissure is emerging between bankers who are worried about increasing regulatory interference and the costs associated with the RBA exercising influence over a greater range of interest rates than its overnight target cash rate, and the RBA that has a legislated obligation to reduce the jobless rate to its new “full-employment” level of 4.5 per cent, which is not likely possible with its remaining monetary policy ammunition.
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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.
