What might a review of the RBA find?

Gov Lowe’s speech, Delta, the Economy, and Monetary Policy, was in many ways a watershed speech.  Lowe jettisoned the blurry two-point-something inflation language in favour of a firm commitment to get inflation back to the middle of the target range and distanced himself from the financial stability argument for raising rates, by saying explicitly that … Read more

APRA shuts the CLF, tells banks to buy assets

[This is an edited version of a post that was first published on livewire, on 10 September 2021] In a move that’s a bit more aggressive than I had expected, APRA just announced that they will close the CLF (Committed Liquidity Facility).   The CLF will be reduced in four equal steps (1 Jan’22: $104 billion; 30 Apr’22: $70 … Read more

Get the banks to buy the bonds (or how to better align fiscal, monetary and bank regulatory policies)

[This is an edited, updated, and expanded version of a post that first appeared on livewire] The COVID-shock of 2020 put a spotlight on a design flaw in Australian regulations. At a time when governments are borrowing lots of money, and the RBA is buying government bonds to boost the economy, regulations discourage banks from … Read more

Sep RBA Meeting: live on Ausbiz

I did the September RBA meeting live with Annette Beacher on Ausbiz. I got a bit lucky on a tight call this time: I had expected 4bn+4bn, and that’s what the RBA delivered. It’s a bit unusual that the RBA isn’t easing given the economic contraction, but I think bond market capacity is the constraint. … Read more