Treasurer Joe Hockey is not happy with the RBA’s inaction over the Aussie dollar’s rise, according to the AFR this morning, which says that the change of “stance” by the RBA with regard to interest rates has “angered” Hockey and his government colleagues.
At question is the RBA’s shift to a neutral bias, where they signal a period of no rate moves, as opposed to the easing bias they had previously which implied that rates would fall further. The Treasurer believes that this change in bias has contributed to the Aussie dollar’s rally to 94 cents recently.
The RBA’s move to neutral bias and a period of “stability” in interest rates reflects the economic reality of an economy on the mend and has been clearly driven by the response in the interest rate sectors of the economy to super-low interest rates of 2.5%.
Equally, the Aussie dollar’s rally has most pundits baffled, with one local bank reporting over the Easter weekend of a trip around Asia where clients were equally perplexed by its strength.
The Government’s displeasure is understandable but it’s more than just interest rate policy that has driven the dollar and unless Treasurer Hockey and his colleagues would like to undo the last 30 years of a floating exchange rate, there is scarce little they can do about the recent rise.
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