Yesterday’s interest rate cut shows the official family in the RBA and Treasury are panicking over the European debt crisis, and are risking the Bank’s inflation-fighting credentials.
On the issue of whether the banks will pass on the rate cut (as reported here in today’s Courier-Mail), I’ve previously written about how the RBA is losing its monetary mojo. Australian banks are heavily reliant on borrowings from overseas, and the interest rates they pay on these borrowings are unaffected by the Australian short-term money market rate that the RBA can influence.
The RBA Governor Glenn Stevens acknowledged the difficulties that banks are facing in securing the big chunks of money they need from overseas in his statement yesterday:
Short-term market interest rates have tended to decline a little further in recent weeks, though term funding conditions for financial institutions have become more difficult.
This means there is no guarantee that banks will pass on reductions in the official cash rate set by the RBA to households.
Queensland Economy Watch 
Hey Gene Tunny,
Very interesting, No Profile Comment
Keep up the good work
In America: governments, businesses, individuals are now buried under a mountain of debt. A mountain of debt that will never be repaid.
Who will borrow when they can’t make the payments on the debt that they have already? The math alone calls for a system reset, a debt jubilee.
Investors are already losing… in a rigged monetary casino that rewards usury, speculation, and currency manipulation while looting main street.
There is a moral principle that debts should be honored. That is, debts between businesses that buy and sell real products, not bundled ponzi schemes, debts between individuals, between friends and businesses that know each other to be rational and moral, debts based on investments where there is a rational expectation of return.
There is also a moral principle that unjust debts should be cancelled, and usury legislated against. Debts that are ‘odious’, debts based on fraud, debts to dictators, debts arranged by oligarchs without the consent of the general population (the 99 percent who have been left out of the equation), debts based upon compound interest upon compound interest, that should have been written off long ago, the debts need to be cancelled in a general jubilee. Think outside the box. It’s time for a jubilee.