Zeroing in on monetary impotence

The politicians have tried to frame this eighth cut in the cycle for their own electoral ends. But post-crisis monetary policy is a difficult beast to pin down, and increasingly feeble anyway.

Joe Hockey was stating the obvious when he made his "appalling" statement earlier this week that another Reserve Bank cut to the cash rate would be a sign that the economy was performing below expectations. The Reserve Bank, of course, cut official rates to their lowest point on record today.

While Kevin Rudd might have thought the comment appalling, it is difficult to spin the latest 25 basis point cut as an indicator that the economy is performing well.

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