It’s got a small, open, export-dependent economy but what does the RBA do? Brings a spoon to the forex bazooka fight every time it is needed. Yesterday’s 25bps was clearly too small and there was no mention of unconventional policy even though we will run out of rate cuts in one month. That’s not just inept. It’s bloody irresponsible.
Is it any wonder that the AUD jumps when the Fed piles in with its 50bps emergency cuts?
On the other hand, the RBNZ has impecaable timing. We’ve seen it lead on the structure of prudential and monetary policy, on macroprudential innovation, and on managing housing markets. Today we get the bank taking the initiative and preparing the ground for its own quantitiative easing:
