As reported by the Wall Street Journal, the Reserve Bank of Australia’s (RBA) Ian Harper is leaning heavily on the weakened AUD for growth support.
Key highlights
According to the RBA’s Harper, economic growth within Australia remains ‘strong’, and any near-term increase in interest rates might spook consumers, especially with wage growth still soft a housing prices on the decline. Harper noted that any slowdown in consumer spending would have an immediate negative impact on GDP figures while overall income growth remains almost non-existent.
Keeping in-line with the RBA’s currrent no-movement stance, Harper is borrowing directly from the central bank’s rhetoric playbook, leaning heavily on slumping wages and weak-kneed consumer spending as the main reasons the RBA remains stoic on rates.
“The best contribution the bank can make at this juncture is to do what they are doing, which is just to sit and make it quite clear what the logic is, and give a sense of where the economy is headed… Why would you put interest rates up when unemployment is still above the natural rate?” – Wall Street Journal
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