I don't either.
Inflation targeting has an anchoring effect on inflation. One of the biggest drivers of inflation is expectations. A credible central bank with a credible inflation target has the ability to anchor inflation expectations.
Its why there's so much effort put into effective central bank governance (independence) in economies around the world.
I don't think anyone can reasonably claim a 'trend' decline in the cash rate as a basis for a continued fall in interest rates. Trend isn't your friend if your using it as a basis for predicting future cash rate. Fast forward 50 years and we'd have negative interest rates indefinitely.
The chart I've shown is a much better reflection of movements in interest rates. There isn't a ongoing downward trend , we are simply in an easing cycle that will one day move back to a tightening one (despite what most real estate agents, brokers, anyone with industry bias will try to purport).
Point is, there has been MASSIVE shifts in the way monetary policy works in Australia. It does mean the days of 10% cash rates are unlikely to be felt as often, if ever, as has been in the past. But it doesn't mean there is a downward trend.
Inflation targeting has an anchoring effect on inflation. One of the biggest drivers of inflation is expectations. A credible central bank with a credible inflation target has the ability to anchor inflation expectations.
Its why there's so much effort put into effective central bank governance (independence) in economies around the world.
I don't think anyone can reasonably claim a 'trend' decline in the cash rate as a basis for a continued fall in interest rates. Trend isn't your friend if your using it as a basis for predicting future cash rate. Fast forward 50 years and we'd have negative interest rates indefinitely.
The chart I've shown is a much better reflection of movements in interest rates. There isn't a ongoing downward trend , we are simply in an easing cycle that will one day move back to a tightening one (despite what most real estate agents, brokers, anyone with industry bias will try to purport).
Point is, there has been MASSIVE shifts in the way monetary policy works in Australia. It does mean the days of 10% cash rates are unlikely to be felt as often, if ever, as has been in the past. But it doesn't mean there is a downward trend.