Terry McCrann, the RBA watcher at Australian Herald-Sun, is out with his latest and emphases that Stevens won’t have anything new on new on rates. He also says the jawboning down the Australian dollar is a losing battle and might be abandoned.
Jawboning only works if it has credible backing — an implicit or indeed explicit message that interest rates would be cut if the dollar stayed ‘too high’.
There is no way that Stevens can hint that. Not with the picture the RBA is painting of our economy picking up pace; and, most importantly — as he did again on Wednesday — of signs that it was ‘rebalancing’ away from the (fading) resources boom.
Also, not with inflation bumping along the 3 per cent RBA ceiling; and with the buoyant property market beginning to lure the banks into over-exuberant lending. Again, something specifically highlighted by the RBA separately on Wednesday.
Be under no illusion. The RBA wants the dollar lower. At least somewhere around the mid-80s; even a little lower.
But it has no magic wand to achieve that.
He says the RBA’s best hope for a weaker AUD/USD is if the US dollar gains on the taper.
