Almost all of the Reserve Bank’s new Term Funding Facility has ended up in the hands of big businesses. There’s a way to make sure small businesses get it.
Peter Martin, Crawford School of Public Policy, Australian National University
Reserve Bank Governor Philip Lowe has laid out a road map for measures to drive a range of other interest rates down, now that its cash rate has hit effective zero.
Modern Monetary Theory allows governments more freedom to run deficits, freedom the Australian government might need.
When the cash rate hits 0.25% the governor will pause for breath. After that he will buy state and federal government bonds, pushing longer term interest rates down towards zero.
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In a speech broadcast live on the Reserve Bank website, the governor explained how quantitative easing would work. He won’t try it until the cash rate hits 0.25%.
MARTIN is helping the Reserve Bank see beyond its headquarters in Martin Place. And it’s open source, giving outsiders an insight into its thinking.
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MARTIN stands for “Macroeconomic Relationships for Targeting Inflation”. The bank’s new computer model says there’s much it can do to boost the economy after its cash rate hits zero.
Sweden’s central bank ways it will no longer invest in assets from governments with large climate footprints, even if the yields were high.
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With a relatively low debt to GDP ratio, Australia was never at risk of becoming Greece. But Germany, with negative interest rates and scant prospects for economic growth, is an open question.
Reserve Bank Deputy Governor Guy Debelle, Governor Philip Lowe, and assistant governors Luci Ellis and Michele Bullock at Friday’s parliamentary hearing in Canberra.
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