The main story in the Business Section of The Australian today with the heading in the paper found above. Online, the headline reads: Rate cuts eroding confidence, bank CEOs warn. They can see it, but unfortunately with modern economics such a backwater of stupidity they cannot explain it.
Commonwealth Bank boss Matt Comyn and his Westpac counterpart Brian Hartzer told a parliamentary committee they were positive about some areas of the economy, such as unemployment closing in on a decade low and a strong export sector, but business investment and wage growth were stubbornly weak.
“Our view is that each subsequent interest rate cut in relatively quick succession has probably dented some level of consumer and business confidence,” CBA’s Mr Comyn said.
“I certainly understand the rationale behind the Reserve Bank’s moves — low inflation, low income growth and lower confidence — and changes in monetary policy stabilise some aspects of the economic picture.
“But our view is that further rate cuts will not lead to a pick-up in economic activity.”
The conclusion is right out of a classical economics text. The reasoning from these bankers is a little loose but it is what they can see right before their eyes. And then, to add to the stupidity, we have the very next story to depress us further: ‘Unconventional’ policy looms as RBA cuts inflation forecasts.
Total incompetence but it is what they believe. That they also think that inflation is under control is even more bizarre. I don’t know where they do their measuring, but it’s not in any of the places I go to buy things. Inflation seems to be ripping along. I guess these public servants have no idea about what is really going on anywhere, other than in the statistics they misread that compensates for their inability to get the economy to grow.