Forum Topics RBA Objectives - The governing role it plays in the economy.
raymon68
2 years ago


The inflation "bogey, gremlim" has caught the USA FED & and our RBA by surprise.

Bonds generally are packaged up for terms of 3 yrs or more..

Below a quick explaination of the unconventional monetry policy that was implemented to keep liquidity in economic system.

Quantative Easing "QE " was the phrase NOW we have "QT" ...( near term ..tight times ahead )


ref: https://youtu.be/kzLOF50UpB8


1st slide a 3 Pronged strategy:

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Turn the money tap on:

reduce the Cash Rate and implement Bond Purchase program.

Oh no high unemployment at 7% ......get the people employed.

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Oh No inflation is 5% ...The FED circa 8%

The Bank Governors reduce the balance sheet over time.

Now the RBA money Tap/ Valve is closing.

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Regards






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Strawman
2 years ago

Thanks for sharing @raymon68

Here's Alan Kohler's thoughts on the RBA's move (i think he makes a few good points)

https://thenewdaily.com.au/finance/finance-news/2022/06/09/inflation-stupidities-alan-kohler/


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raymon68
2 years ago

Updated 14/6/2022

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In his first public appearance since the RBA raised the cash rate by a larger than expected 50 basis points at last week’s board meeting, Dr Lowe said he is predicting inflation to rise to seven per cent by year end.

That compares with a current rate of inflation of 5.1 per cent.

“That’s a very high number and we need to be able to chart a course back to two to three per cent. I’m confident we can do that but it’s going to take time,” Dr Lowe said in a rare television interview on ABC’s 7.30 on Tuesday.

“With inflation being as high as it is, and with interest rates as low as they are, we thought it was important to take a decisive step to normalise monetary conditions and we did that at the last meeting.”

He said it is reasonable to expect the cash rate will get to 2.5 per cent at some point, but said it will be driven by events.

The cash rate currently stands at 0.85 per cent after the RBA raised it at consecutive board meetings from a record low 0.1 per cent.


It was only last year the RBA had been expecting to keep the cash rate low until 2024, but Dr Lowe said that was never a promise.

#?!!#Ouch... to the holders - Get that one tool that fixes everything - Thee fiscal HAMMER -- BANG yes BANG, THUD...


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raymon68
2 years ago

Good thats a good article by Alan.K..

Concludes ..' Tongue in cheek' satire...

Would 4-5 per cent inflation be so bad? No. Is it worth raising interest rates enough to throw a million people out of work to get it down by 2 percentage points?

Of course not, especially when the inflation is caused by nothing that can be changed by raising interest rates.

It’s a bit like chemotherapy that kills the cancer by taking the patient to death’s door.


Yes i thinking 4 to 5 % inflation would keep people in jobs..They need to change this silly ( Bernie Fraser old hat, daggy cardy 2% economic theory )

Surely some Socialist & Liberal movement should change this attitude..

RBA own Policy says " Keep people in jobs", "Keep inflation around certain criteria usually 2% . & " Prosperity for Australia"

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