THE DISTILLERY: RBA stay

The Reserve Bank of Australia isn't reducing interest rates at today's monetary policy meeting, according to the business commentators. That's not to say that the economy is doing particularly well, or that the Reserve Bank believes it shouldn't bring down the Australian dollar – that's not its approach, explains one commentator.

Also in this morning's heavy shot from The Distillery, the media movements brought about by likely changes in the ‘reach' rule get a solid lookover, while The Australian's John Durie keeps us up to date with a very important, but poorly defined, piece of competition legislation.

But first, The Australian's Henry Thornton (not the writer's real name) says quite simply that interest rates won't drop today because there's simply no reason to do so.

"Inflation remains within the target range, unemployment (as measured by the ABS) is low and the dollar is strong. Share prices are rising strongly, company profits are growing and house prices seem to be reviving. Looked at by people with secure, high-paid jobs and generous defined-benefit pensions, the macro picture of Australia seems glowing. But come down to the grassroots and the picture quickly seems less rosy. Jobs are hard to get and companies are cutting costs largely by cutting jobs. The cost of living seems to be rising inexorably. Home ownership looks impossible for all but the lucky young people who get one of those precious jobs. Look a little deeper, if you will. We learn from recent news reports that Australian peach growers are destroying their crops because canners are preferring cheaper imported peaches.”

The Herald Sun's Terry McCrann similarly agrees that the Reserve Bank will keep interest rates on hold today, but puts some context into the commentary surrounding the central bank and the Australian dollar.

"The Reserve Bank has done precisely what it could, and knowing precisely what it's trying to achieve, by cutting rates as much as it did over the last year. It was not trying to cut the value of the dollar, but to alleviate the consequences of the high dollar, in the broader context in which business sits. It's been growing much clearer that for whatever reason – greater confidence in a US recovery? The exact opposite: fear and loathing of Washington? – the Aussie dollar has not simply slipped out of the currency spotlight, but is sliding under the basic weight of financial gravity. We run a huge – and permanent – current account deficit. Unless discretionary money is pouring in, our dollar will prima facie be under downward pressure.”

And Fairfax's Tim Colebatch has a simply terrific piece where he takes us back in time to 1980, when there were arguments in Victoria about the resources boom wrecking the southern state's economy.

Of course it didn't, as many other have pointed out. But Colebatch uses the imagery of the 1980s to show how the situation is so different this time around. It's The Distillery's favourite piece this morning.

Meanwhile, The big story out of yesterday's media cycle was the confirmation from Southern Cross Media that it's considering its options with pending changes to federal media ‘reach' rules – that means mergers with one of the big three networks.

But before we get into that, Fairfax's Elizabeth Knight has a great detail this morning on the billionaires sitting at the Ten Network boardroom table, which is the weakest of the big three networks at the moment.

"The Australian Competition and Consumer Commission undertook an undisclosed investigation into James Packer and Lachlan Murdoch's acquisition of 18 per cent of Ten Network because of concerns over sports programming. The secret work was done and evidence was taken in response to the decisions made by the Packer/Murdoch-led Ten board to scrap the Ten digital channel, One, which had been entirely devoted to sport. At the time the Packer-controlled Consolidated Media Holdings had a 50 per cent interest in subscription producer of sport Premier Media Group. The other 50 per cent was owned by News Corporation – which is controlled by Murdoch's father, Rupert.”

Reports have been circling that Southern Cross Media's talks with Ten has been going on for far too long and, most recently, that it's talking to Nine. It's not hard to put together what's happening, but Business Spectator's Stephen Bartholomeusz has a different take on that particular battle and a great summation of the media jostling generally.

"It isn't a foregone conclusion that Southern Cross would desert the sinking Ten network to merge with Nine if the legal framework changed. It is roughly the same size as Ten (it has a fractionally bigger market capitalisation) and it, and its 25 per cent shareholder Macquarie Group, might see more upside and influence in a merger with Ten if it believed Ten was salvageable. Every time there has been a change in media laws in the past it has created a lot of strategic activity and inevitably winners and losers, perhaps more of the latter than the former. This time, assuming there is a change to the audience reach permitted, is likely to be no different.”

Elsewhere, The Australian's John Durie looks at the support that the Australian Competition and Consumer Commission is getting for its appeal for a case it just lost for Lux vacuum cleaners on the topic of "unconscionable conduct”.

"The term is not defined in the Competition and Consumer Act and some regard it as an anathema because it is essentially a moral judgment, which of course it is. In essence it is the knowing exploitation by one party of the special disadvantage of the other. Something clearly unfair or unreasonable should be established."

In other regulatory news, The Australian Financial Review's Andrew Cornell has a good piece on UBS being named as one bank whose traders tried to play around with Australia's bank bill swap rate. But he also points out that our BBSW is crucially different from Britain's London Interbank Offered Rate, which was famously manipulated.

In mining, The Australian's Barry Fitzgerald looks at the heavy treatment that mining stocks have copped since Valentine's Day – Rio Tinto down 11 per cent, BHP Billiton 8 per cent, Fortescue 18 per cent, Mount Gibson 24 per cent and Atlas Iron 27 per cent – despite the iron ore price remaining above $US150 a tonne.

Speaking of miners, The Australian Financial Review's Chanticleer columnist Tony Boyd reminds readers that Rio Tinto is the most efficient producer of iron ore out there. Hence, bearish predictions on the price should be weighed about Rio Tinto's huge profit margins.

And finally, The Australian Financial Review's Mike Smith says there are quiet discussions in the background of Origin Energy for boardroom renewal, but highly respected managing director Grant King is still well backed despite the profit downgrades and cost blowouts.