RBA’s Debelle –
- AUD remains “higher than most conventional estimates of fundamentals would indicate”
- Exchange rate is offering less assistance than it would normally be expected in achieving balanced growth in the economy
- “Australia’s terms of trade has continued to decline and some key commodity prices for Australia, most notably the iron ore price, have declined considerably … On that basis, the Australian dollar is still higher than most conventional estimates of fundamentals would indicate, notwithstanding its recent decline“
- The main development in FX markets in recent months was the appreciation of the U.S. dollar
- “We are in an unusual environment where monetary policy settings in the four major economic regions – the U.S., China, Europe and Japan – are moving in divergent directions”
- Balance sheets of major central banks are at an unprecedented size…. creates a complicated environment for setting monetary policy in other parts of the world, including here in Australia”
RBA Assistant Governor Guy Debelle speaking at a Citi conference in Sydney
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I thought Debelle’s speech might have been non-public…. wrong!
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Added - Ungated coverage at the Australian Financial Review (bolding mine);
- Citing the 1994 global bond market crash as a “good example,” Dr Debelle said there were several reasons to suspect that the next sell-off, particularly in fixed income, “could be relatively violent when it comes”.
- “There are a number of anomalies present in financial markets in terms of pricing and volatility,” Dr Debelle said in a speech to Citi Markets Conference in Sydney on Tuesday.
- “There are also some misplaced perceptions amongst market participants about the degree of liquidity present in some market segments.
- “That strikes me as a dangerous combination and unlikely to be resolved smoothly.”
