Daily Business Report

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Central banks pushing on strings again Posted: 12 Aug 2016 06:41 AM PDT This month has seen the antipodean central banks both cut rates, with almost no flow through to mortgages to relieve consumer debt and an appreciation in their respective currencies, in perfect opposition to their stated goals. This is not a new trend – far from it. What's supposed to happen when the local economy slows is you pull the lever, Kronk, lower interest rates stimulate consumer spending, reducing savings rate as a deluge of money floods the economy, inflation goes up, wages go up, more spending and whoosh, in come the accolades from the captured business media elites. Now levers are pulled left right and centre and nothing seems to happen, further hindered by a lack of communication from both monetary and fiscal authorities into the truth of the matter at hand – that a lack of confidence in the direction of the economy is what is holding back consumer spending, not lower rates. Furthermore, communicating and smoothing the confidence game that is the market is now becoming more of a parasite/host relationship, instead of a divorced, clinical approach in the past. At Forexlive they put it a little less eloquently: Read the entire article

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