We didn't hear Governor Glenn Stephens concede in his recent statement that RBA policy settings have been wrong for the past year and apologise to all those...

We didn't hear Governor Glenn Stephens concede in his recent statement that RBA policy settings have been wrong for the past year and apologise to all those people on the growing unemployment queue, but he did cut interest rates. Professional investors know that central bankers have to manage expectations. This means they play rhetorical tricks. They do not say, whoops, Australia is facing a declining economic outlook and I am going to cut further. If they said that, then any hope of reinvigorating animal spirits would be muted until rates fell again. Rather, they downgrade their growth targets and say we will review interest rates in the light of changed economic conditions. The macro upshot is that interest rates are likely to fall further as is the currency. Read more from Avoca Investment Management (VIEW LINK)