In a speech back on Tuesday, RBA Assistant Governor (Financial Markets) Guy Debelle’s warned that financial markets could be headed for a “violent” adjustment.
The Australian Financial Review reports on comments within the financial community that Debelle should not have used such inflammatory language, he should be more cautious in his choice of words, for example:
“If that speech was supposed to be Debelle’s audition for the top job at the RBA he really blew it,” Armytage Private Capital chairman Lee laFraté said.
“Central bankers are in a critical role and need to be much more circumspect and cautious in their commentary,” Mr laFraté said.
But, others welcome Debelle’s words:
Ardea Investment Management principal and portfolio manager Tamar Hamlyn applauded the assistant governor for taking a strong stance.
“The flash crash in United States bond markets the following night is pretty convincing evidence that Dr Debelle was spot on,” Mr Hamlyn said.
“It would be irresponsible for the RBA to continue to shy away from highlighting the very concerning issues happening in financial markets at the moment,”
I note that yesterday Bank of Japan (BOJ) Governor Kuroda answered a question in the Japanese parliament, saying:
can prevent hyperinflation with monetary policy
As someone said … you’re not supposed to mention the “h” word!
Maybe this is the start of new trend – central bankers being a little more forthright in their views? Calling a spade a shovel, if needs be. I hope so.
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Oh and as a ps. – I’m with Debelle on this one … let’s replace ‘irrational exuberance’ with ‘violent adjustment’. Yeah!
