RBA Stevens Q&A:
- Says risk of AUD will fall materially is underappreciated
- He remains of the view that on most metrics it would be surprising if the AUD remains so high
- He is puzzled why the US dollar is not higher given the US is recovering
- Says intervention on AUD is part of the tool kit if thought useful
- Says have not considered intervention useful so far
- Would not want to give advance warning if did consider intervention
- Says economy does not need draconian* fiscal tightening right now
- Says budget problems are in the medium term
- Says recent reading on unemployment was a weak one, difficult to interpret
- Some improvement in employment growth this year
- Some leading employment indicators have improved
- A while before we’ll see sustained unemployment drop
- AUD high in part because global capital finds Australia attractive
(Draconian* means harsh, severe in this context)
ADDED – RBA’s Kent comments now:
- Says unemployment not to fall sustainably until late 2015, early 2016
Kent is Assistant Governor (Economic)
ADDED – RBA LOWE (Deputy Governor):
- Says monetary policy can’t be engine of growth
- Australia needs to enliven entrepreneurship
- Worried Australia becoming too risk averse
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Ps. – Stevens opening statement is here: Reserve Bank of Australia (RBA) Stevens testimony: Says RBA is allowing time for measures to take effect
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Quick interpretation from Westpac (Sean Callow, Senior currency strategist at Westpac in Sydney):
- Gov Stevens on underappreciated risk of significant fall in AUD is repeat of 3 July speech
- View on economy more positive
- No rate cut hint
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Any further comments from Stevens will be in this new post:
