RBA decision to cut interest rates

[Wezanator123]

Well... as expected the RBA cut interest rates today in their meeting.
Since it was just implemented should we talk about it in the exam ?

here are some links:


http://www.rba.gov.au/media-releases/2011/mr-11-24.html

http://www.theaustralian.com.au/business/interest-rates/reserve-bank-cuts-rates/story-fn91wad8-1226182628415

http://www.theage.com.au/business/rba-rate-cut-sparks-commercial-response-20111101-1mte4.html

http://www.heraldsun.com.au/news/more-news/tipping-a-melbourne-cup-day-interest-rates-cut/story-fn7x8me2-1226181920277

[Hutchoo]

Yeah, the exam is in ~9 days and it wouldn't be too hard to understand what's going on. Plus it shows the examiners that you know some real life examples of how IR changes inflation/increases purchasing power lalala etc.

[soldier_on16]

Given that interest rates have been kept the same at 4.75% for 11 months, how would you go about describing monetary policy stance as a whole after this rate cut?

[chrisjb]

Given that interest rates have been kept the same at 4.75% for 11 months, how would you go about describing monetary policy stance as a whole after this rate cut?

Just say exactly what has happened, the RBA took the view that a slightly restrictive stance was in order since November last year due to x,y and z, however due to x subsiding, new data for y and the persistence of z, the RBA decided that a rate cut was in order and it's now around the neutral level.

[RossiJ]

Given that interest rates have been kept the same at 4.75% for 11 months, how would you go about describing monetary policy stance as a whole after this rate cut?

Just say exactly what has happened, the RBA took the view that a slightly restrictive stance was in order since November last year due to x,y and z, however due to x subsiding, new data for y and the persistence of z, the RBA decided that a rate cut was in order and it's now around the neutral level.

how do I solve for x, y and z?

[chrisjb]

Given that interest rates have been kept the same at 4.75% for 11 months, how would you go about describing monetary policy stance as a whole after this rate cut?

Just say exactly what has happened, the RBA took the view that a slightly restrictive stance was in order since November last year due to x,y and z, however due to x subsiding, new data for y and the persistence of z, the RBA decided that a rate cut was in order and it's now around the neutral level.

how do I solve for x, y and z?

haha, I just put in random letters, choose any three economic demand factors that you know have affected inflation and she'll be right. There's hundreds you could choose from

off the top of my head:

consumer caution
mining boooooooom
euro zone debt cirsis
japanese earthquake
high AUD
retail sales growth
manufacturing sector decline
(half of those listed above are interconnected anyways)

[soldier_on16]

Just define x, y and z from http://www.rba.gov.au/media-releases/2011/mr-11-24.html and all the factors Glenn Stevens metioned.
You think quoting from the report will get full marks?

[RossiJ]

Just define x, y and z from http://www.rba.gov.au/media-releases/2011/mr-11-24.html and all the factors Glenn Stevens metioned.
You think quoting from the report will get full marks?

You can quote directly, but not use quote marks I presume?