Michele Bullock begins her press conference by basically reading out the board statement. 

Then the questions start. 

She tells Reuters that she “think the economy still is in a good spot”. 

And then to a journalist form Newswire who oddly seems to be concerned that prices are not going to go down that “the fact is that prices have risen and their staying up there permanently. We’re not going to see a decline in we don’t want to see deflation. Deflation is not good for businesses.” This is quite correct – prices falling across the board is Great Depression time. The key is to ensure wages are able to rise in such a way as to recover the lost living standards. 

Unlike in the previous meeting, today Bullock is not giving any forward guidance on whether rates will likely go down or stay steady (which really means they will stay steady)

Bullock then says that she thinks the current interest rate is “probably a little bit restrictive” – ie she thinks the current cash rate is slowing the economy (causing unemployment to rise). She then adds “So how restrictive are we at the moment? I don’t know. So we’re really that’s why we have to be data dependent. We have to see what the outcomes are looking like, what the forward looking indicators are telling us and what our forecasts are telling us.” And I guess it is good to hear the Governor of the Reserve Bank admit that she doesn’t know how much the setting of interest rates is slowing the economy, but also a bit concerning. It does however highlight that those going around thinking economic policy is a precise activity are very much wrong.