No case for interest rate hikes in Australia, RBA's Harper says
Excess capacity in the Australian economy means that interest rate hikes are not justified and there is nothing the Reserve Bank can do to stymie the drop in the US dollar, one of the country's top rate-setters said.
In an interview with Bloomberg, Reserve Bank of Australia board member Ian Harper pointed to unchanged measures of so-called underemployment and slow wage growth to back up his case for the former.
So despite what he described as "terrific" growth in full-time employment, Harper added: "So long as that is the case, why would anyone be suggesting tightening monetary policy when the economy is operating below potential: I mean hello?"
He also said there was little RBA could do to brake strength in the Aussie's value because it was being driven by weakness in the Greenback.
"If you're propsoing that there's some council of intervention here, what are you going to do, try and influence the US dollar? Give me break," he said.
Harper, one of six independent directors on the committee, also appeared to indicate he was satisfied with the effect of recent curbs on home lending by investors in shunting capital back towards potential home owners.