RBA’s Stevens stomps on the AUD : Repeats AUD high by historical standards

Comments from Reserve Bank of Australia (RBA) Governor Stevens, to the Australian Conference of Economists (ACE) and the Econometric Society Australasian Meeting (ESAM), Hobart:

• Says rebalancing signs encouraging but some way to go yet
• Says monetary policy very accommodative, but still has ammunition on rates
• Says A$ overvalued by most measures, and by more than a few cents
• Says investors under-estimating risk of sharp fall in A$ at some point
• Says not seeking to actively “jawbone” the currency lower
• Has not contemplated tightening, stability language has worked on market expectations
• Could drop reference to stable rates long before giving any thought to tightening
• Says federal budget unlikely to change near term economic outlook
• Says longer term tightening of fiscal policy seems sensible
• Questions whether budget impact on household confidence will persist
• Says q1 gdp probably overstated pace of growth, outlook little below trend
• Housing market appears to be calming down, slower price growth favoured
• Says conditions in housing market do not warrant higher rates

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I told ya:

• Given the AUD has weakened after the trade data, it wouldn’t surprise me if Stevens took the opportunity to give it another kick while it was down. As a central banker concerned about how high the currency is, it would seem the responsible thing to do … not doing so would seem irresponsible even.

You’re welcome.

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Here’s the full text: Speech by Glenn Stevens, Governor, to the Econometric Society Australasian Meeting and the Australian Conference of Economists, Hobart