In simple terms, the answer is … both indirectly and indirectly.
The RBA’s Dilemma
General consensus is that our dollar should ideally be trading at around US85 cents. And that would provide a balance between encouraging non-resource export businesses, while not adding unwanted inflationary pressure.
The RBA could achieve this simply by lowering the official interest rate. However, that would then fuel even more local borrowing — especially within the residential property market. [Read more…]