While one rabid ALP economist tries to argue that when the PM publicly seeks easier monetary policy she is not looking for lower interest rates, and conveniently ignores the fact that this was precisely the briefing given by the PM's office to none other than the AFR's Laura Tingle, here is the objective assessment of one of the world's biggest banks in a note to clients:
"Meanwhile, in Australia, some attention has been directed to a speech by PM Gillard in Perth. Initial briefing before the speech suggested a surplus by 2012/13 would give the RBA more room to cut rates. That line seemed to be politically motivated, since there is absolutely nothing about the current setting of fiscal policy that is preventing the RBA from cutting rates. A particularly harsh contraction in fiscal policy might convince the RBA to cut rates in an effort to balance the impact of monetary and fiscal policy. But that’s not the same thing as giving the RBA room to cut rates. The PM has since retreated a little, softened her language and reiterated the RBA’s independence."
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