Tuesday, 31 March 2009

Talking down the rates

Federal Treasurer Wayne Swan is another minister who has chosen to avoid the normal form of words that are applied when someone asks about the activities of a statutory body under his control. Treasurers traditionally leave comments on possible interest rate decisions up to the Reserve Bank which makes them. But from Japan yesterday Treasurer Swan told the Reserve Bank that it has room to cut interest rates further. Talking at a business function, he said that while the bank had cut the cash rate further and faster, and to a lower level, than in living memory, “importantly, however, it has room to cut rates further if necessary — a luxury that many of the world’s key central banks no longer have.”
The market seems to agree with the Treasurer. The Crikey Interest Rate Indicator has a clear majority believing that the Reserve Bank will cut rates again at its April meeting.
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