Following are two letters published this morning suggesting (by me) that there may currently be scope to reduce interest rates and take some of the pressure off the exchange rate. The abbreviated version published by The Age is the first of my many letters sent to it published for about three years. A red letter day, perhaps?
I also include a letter by one of Australia’s top climate scientists, Bill Kininmonth, explaining to the CSIRO’s expert (sic) that, in assessing tidal gauge measurements of changes in sea levels around Australia, account has to be taken of likely shifts in sections of the land on the Australian continent. These may account for the apparent greater rise in sea levels in west and northern Australia than on the eastern side. As Bill suggests, it is continental shifts that probably have the greatest influence on changes in sea levels not climate change. In his letter yesterday the CSIRO expert suggested that Australian sea levels are rising faster that the global average but made no mention of the likely effects of continental shifts. Another example of the incomplete analysis on climate change published by CSIRO.
I am hoping, at an early date, there will be more published on sea levels and the apparent very recent major change in the (world) debate on climate change.
Des Moore
Signs for cash rate to be lowered
letter published in The Australian Financial Review, 10 February 2012
The statement by the Reserve Bank of Australia’s governor Glenn Stevens on the board’s decision to leave the cash rate unchanged at 4.25 per cent acknowledges that, while growth is close to trend, labour market conditions softened during 2011, CPI inflation declined as expected and will fall further over the next quarter or two. Credit growth remains modest and the exchange rate has risen further “to the point where in trade-weighted terms it is somewhat higher than the Bank had previously assumed”.
It is disappointing that there is no indication in the statement of the possible effects of Australia’s relatively high interest rates on inflows of foreign capital. Financial market reports have suggested that, particularly having regard to uncertainties overseas, foreigners have been encouraged to invest in Australia in circumstances where there is little or no exchange rate risk. This may help account for the exchange rate being higher than the Bank assumed.
If that is the case, and having regard in particular to the now reduced risk of inflation, the situation may now have been reached where the cash rate could be lowered further and where, subject to rates on their extensive overseas borrowings, our banks could also reduce their domestic rates without reducing their profit margins. It is to be hoped that the Bank will review this situation when it next considers the cash rate.
Des Moore
Institute for Private Enterprise
South Yarra Vic
Consider the cash flow
letter published in The Age, 10 February 2012
It is disappointing that in Reserve Bank governor Stevens' statement on the unchanged cash rate there is no indication of the possible effects of Australia's relatively high interest rates on inflows of foreign capital. Financial market reports suggest that foreigners have been encouraged to invest in Australia where there is little exchange rate risk. This may help account for the exchange rate being higher than the RBA assumed. If that is the case, the situation may now have been reached where the cash rate could be lowered further and where, subject to rates on their extensive overseas borrowings, our banks could also cut domestic rates without reducing profit margins. It is hoped that the RBA will review this situation when it next considers the cash rate.
Des Moore,
South Yarra
Levels all at sea
letter by William Kininmonth published in The Australian, 10 February 2012
THE clarification on Australian sea-level observations by Bruce Mapstone (Letters, 9/2) fails to reveal all of the uncertainties relating to the data.
Australian tide gauges accurately measure the relative movements of sea level with respect to the gauges. However, the vertical movement of individual tide gauges is uncertain.
It is well established that high latitude Atlantic tide gauges of Europe and Canada are rising as the land rebounds from the ice loading of the last ice age, giving an appearance of dramatically falling local sea levels.
Australia is moving towards Asia at about 7cm per year and plate subduction, especially across the north, is recognised but not well quantified. Continental movement, not climate change, is potentially the biggest contributor to recent local sea level change.
William Kininmonth, Kew, Vic