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Stevens busts myth of two-speed economy
Michael Pascoe
September 21, 2010 - 1:32PM When Reserve Bank governor Glenn Stevens says something, anything, that might hint at the direction of interest rates, that’s what reporters concentrate on because that’s what impacts the hip pockets of savers and borrowers alike – and because that’s what reporters always concentrate on when the RBA governor says something, anything.
Too bad then about the other 3000 considered words and seven graphs in Stevens’ speech yesterday that busted much of the myth about the “problem” of Australia having a two-speed economy. It doesn’t rate alongside speculation about whether the next 25-point cash rate increase happens before or after Christmas.
Yet the RBA’s perspective on the extent of the two-speed economy and how much of a problem it might be is important, not least because Stevens’ speech seemed to contradict a lot of political guff we’ve tended to swallow as accepted wisdom and that, thanks to the Uber-Independents, we’ll hear a lot more about.
Leaving aside the compulsory headline interest rate hint then, Stevens’ Shepparton speech seemed to have two main points:
Michael Pascoe
September 21, 2010 - 1:32PM When Reserve Bank governor Glenn Stevens says something, anything, that might hint at the direction of interest rates, that’s what reporters concentrate on because that’s what impacts the hip pockets of savers and borrowers alike – and because that’s what reporters always concentrate on when the RBA governor says something, anything.
Too bad then about the other 3000 considered words and seven graphs in Stevens’ speech yesterday that busted much of the myth about the “problem” of Australia having a two-speed economy. It doesn’t rate alongside speculation about whether the next 25-point cash rate increase happens before or after Christmas.
Yet the RBA’s perspective on the extent of the two-speed economy and how much of a problem it might be is important, not least because Stevens’ speech seemed to contradict a lot of political guff we’ve tended to swallow as accepted wisdom and that, thanks to the Uber-Independents, we’ll hear a lot more about.
Leaving aside the compulsory headline interest rate hint then, Stevens’ Shepparton speech seemed to have two main points:
- To assure the regions that the RBA does care about them and makes a real effort to keep tabs on how they’re travelling while it wields its blunt monetary policy instrument – but it still has to deal with the national economy as a whole and the instrument is blunt, so too bad if the interest rate cosh is felt more painfully in some places or industries than others.
- To explain that the two-speed economy stuff is exaggerated, that we have systems, policies and flexibilities that spread the love around, so stop whingeing and get on with enjoying a wonderfully strong economy brought to you by a marvellous Reserve Bank that has delivered over the past 17 years an average inflation rate of 2.5 per cent – smack in the middle of its target range. Just how damned good are we? High fives all round Martin Place.
