Zip it RBA

July 24th, 2017

Reserve Bankers should stop thinking they’re Rock Stars especially as their rates repertoire hasn’t changed over the last 10 concerts.

As erudite and educational as the speech reported in this DFA Blog might be (zero points for clanger spelling error in the blog’s title), you get the feeling much of that speech was motivated by the need to correct a torrent of commentary, currency speculation, bond and property market volatility unleashed by two rather innocuous paragraphs in the RBA’s earlier released Minutes discussing a 3.5% neutral interest rate.

While transparency is a good but usually rare thing, we really doubt the utility (other than to speculators, traders and content hungry journo/bloggers), of a central player like the RBA continuously disclosing its ruminations.

If only it spent as much time requiring industry players to continuously disclose their data, we and it would be better off.

Meantime and farcically, the monthly official cash rate is set irrespective of the growing number of transactions in the nation’s biggest property market where “price not disclosed”.

APRA so far hasn’t succumbed to the same temptation and the world hasn’t stopped turning.

On the contrary, its patient – perhaps too patient – brouhaha free decisions are now having a greater impact on the property market than the RBA’s especially given the growing disconnect between the official cash rate and actual market interest rates.

Unlike its show pony co-regulator, APRA is conveying much needed calmness and certainty.

Maybe the RBA is suffering Relevance Deprivation Syndrome? Maybe it’s just another mojo loss.

Whatever, it should take a leaf out of APRA’s book and publish decisions with reasons but without a news feed spruiking its doubts and chin scratching.

We all know current settings are “accommodative”, so why not zip it unless and until it really is otherwise?

http://www.digitalfinanceanalytics.com/…/rba-cools-arder-o…/