National Australia Bank with their morning note, asking "Why have central banks become hawkish all of a sudden?"
NAB says that the speech from Draghi yesterday is worth re-reading on this, and then outline 3 points:
- The link between monetary policy and the real economy is working
- The link between a growing real economy and inflation is more subdued than in the past, but the factors holding this back are temporary and thus brings the fear of inflation breaking out as the economy continues to improve
- Financial conditions are becoming easier as the real economy expands
Thus a constant policy stance is becoming more accommodative.
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NAB ponder ... "Will Australia join the central bank party?"
- A Bloomberg article covering a three day old article by ex-RBA board member John Edwards suggested it may. Dr Edwards opined "if the RBA's economic forecasts prove correct. It's possible the tightening could start earlier, or if not the tightening itself, at least the signalling which should precede it. We may be seeing a little of that now...it would [see a]...natural policy rate as at least 3.5%.
(I posted on this article yesterday before it hit the wires)
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ps. A positive night for commodities;
- Brent crude oil +1.54% to $47.37
- Gold+0.1% to $1,248,
- Iron ore +4.4% to $62.33,
- Steam coal +0.1% to $80.65,
- Met. coal +0.0% to $146.50.
Has not done the Australian dollar any harm
