Australia’s neutral rate of interest is around 3.5% – RBA minutes
The Reserve Bank of Australia’s (RBA) latest minutes were interpreted by markets as having a hawkish slant, as they revealed the central bank’s estimate of the neutral nominal interest rate was 3.5%.
“All estimates of the neutral real interest rate for Australia suggested that monetary policy had been expansionary for the previous five years or so,” stated the minutes, published today (July 18).
While the estimate was 150 basis points lower than the figure for 2007, it would still imply rates
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