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The Forum > Article Comments > Rate cuts not the answer to high $A > Comments

Rate cuts not the answer to high $A : Comments

By Henry Thornton, published 7/5/2013

The bank faces an acute dilemma, however, due to its failure to acknowledge (or perhaps failure to accept) that monetary policy cannot serve two masters.

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The dollar is neither high nor low. The value of the A$ is exactly what it should be. It might be higher than some would like and not as high as others would like but that has little to do with anything.

If Government want it lower they have every mechanism they need to make it lower. One assumes that regardless of Treasurer Swan's rhetoric, it's where he wants it, otherwise Policy can be used to change it. Tut tut'ing for the Press seems incredibly disingenuous, I guess theatrics is the best synonym for politics.

Low interest rates achieve very little. If they did the US, Japan. the EU etc would be going "gang busters". Starting productive enterprise is not what the money is available for. Some people will load up with a little more debt to buy houses and shares, increasing prices above sound investment levels, especially with the former. Achieving what exactly ?

Historically low interest rates are the early signs of an impendingly moribund economy.
Posted by Valley Guy, Wednesday, 8 May 2013 7:32:08 PM
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True unemployment might be around 12 percent if realistic criteria were applied to determine employment statistics. If either of the major political parties honestly tackled this problem, the AUD would dive down to where it belongs, thus benefiting exporters and manufacturing and putting a brake on imports. Alas; an apparent absence of political will.
Posted by Bushranger 71, Sunday, 12 May 2013 7:13:09 AM
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