While addressing a packed house of the hedge funds and bankers at the financial services program of the G'DAY USA, Treasurer Wayne Swan has indicated to US investors that further interest rate cuts are likely in Australia.
This statement fueled Opposition claims that the Government is dictating monetary policy to the supposedly independent Reserve Bank.
Mr. Swan stated in his speech that Australia had more room to adjust fiscal and monetary policies than most other countries, and that both had been swiftly deployed to strengthen domestic growth and limit the impact of this global recession on local jobs.
However during a panel discussion afterwards Mr. Swan stated that Australia had the capacity to do more through monetary and fiscal policy.
He went on further to say that Australia's cash rate, through which the Reserve Bank set mortgage rates, was 400 basis points (four per cent) higher than the US Federal Reserve.
Shadow Treasurer and Liberal Party Deputy Leader Julie Bishop who also attended the G'DAY USA program leapt on Mr. Swan's remarks stating that the very clear message from the Treasurer was that he expected the Reserve Bank to continue to reduce the official cash rate.
Mr. Swan highlighted the case for another rate cut with a warning to U.S. investors that we were not immune to the global financial crisis and that the worst of it was yet to come.
Mr. Swan was quick to point out the Governments quick action of a $10 billion Economic Security stimulus package to confront, the global meltdown.
Australia's AAA credit rating has recently been re-endorsed by the international rating agency Standard & Poor's and our four major banks are amongst the top eleven in the world.