Why Stevens is playing with fire

Without policy reform the Reserve's cut may cause inflation, and damage banks and housing rather than boosting business activity. But both parties are sitting on their hands.

Reserve Bank Governor Glenn Stevens is playing an interest rate game that is not working and could easily backfire on Australia.

If Stevens is not very careful he will rekindle inflation, damage Australian banks and over-inflate the Australian housing market. He desperately needs the politicians to help him but so far neither side is responding in official policy.

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