Hi Ronen, This is true! The currency can be a great shock absorber for a relatively small country like Australia. Separately, a strong fiscal response from the government will also prevent the RBA from moving..hence the title of my piece includes the word 'probably'. Nothing is ever certain.

On Australian interest rates: the next move is probably down -

Hi Ian. Thank you for your comment. I agree with your comments. And I also believe the RBA will be very reluctant to reduce interest rates further due to recent experiences in the residential market. But if we are correct about the macro effect of household savings the real economy will slow. In that regard, please note the paper is a prediction rather than a recommendation. And if the RBA does cut interest rates, I do not think there will be much benefit for house prices in the near term. The current pipeline of new supply is too great.

On Australian interest rates: the next move is probably down -

Hi Robert. Thank you for your comment. I agree with much of what you wrote. I think a far better outcome would be to keep rates steady and for a large scale tax cut and fiscal expansion. That is the easiest way to get money into the hands of households, sustain the savings rate, and support the economy. Unfortunately this response does not appear on the political agenda. The Govt seem happy to have the RBA manage the economy - and when your only tool is a hammer, every problem looks like a nail.

On Australian interest rates: the next move is probably down -