Flint-heartedness seems to be catching. Not only has the government sent a clear message to manufacturers that there’ll be no more taxpayer bailouts, the Reserve Bank has now changed its mind about a currency bailout.
When the dollar was US91 cents last year, governor Glenn Stevens said it should be 85 cents, having spent a couple of months saying it was “uncomfortably high”. It was assumed the RBA was much happier about an exchange rate-led recovery than more rate cuts because it didn’t risk creating a housing pop. Manufacturers were grateful but added: “No, no. Make it US80 cents please, not 85”.