The Aussie also got a boost this week after the RBA’s minutes of its July policy meeting showed board members had discussed the neutral rate of interest.
The RBA sees the neutral policy interest rate — which neither stimulates the economy nor retards it — at 3.5 percent compared to the official cash rate of a record low 1.50 percent.
That was interpreted by some in the market as a hawkish message, a conclusion that Debelle rejected.
“No significance should be read into the fact the neutral rate was discussed at this particular meeting,” Debelle added.
He pointed out that the policy rate in Australia was low because the neutral rate was lower than it used to be. That means the current policy setting was not as expansionary as a 1.50 percent cash rate would have been in 1990s or early 2000s.
Debelle also noted that a rising local currency could “counteract” the benefits of low cash rates and faster global growth.
“While an easier monetary policy elsewhere in the world should lead to faster growth in the world economy, which is good for the Australian economy, an appreciating exchange rate works against this,” he added.
