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RBA rate rise is news in Tokyo

4 November, 2009

As TV Tokyo’s World Business Satellite late night news program was drowned out by the sound of my washing up, I picked up the words “Australian Central Bank” – and turned to see that the 0.25% consecutive rate rise by the Reserve Bank of Australia had indeed been picked up by the late night news team on the TV channel affiliated with Japan’s ubiquitous financial newspaper, the Nikkei (Nihon Keizai) Shimbun.

And the presenters quickly showed why – a graph of central bank (official) rates in several countries showed that Australia was well higher than Norway, the EU, and the US, which had flatlined to the same level as Japan. Hence, whether the typical reading for such a macroeconomic policy movement be to curb spending, increase investment, or prevent deflation, for investors, Australia clearly offers one of the highest cash rates among OECD countries, and one of the first to begin raising rates (at least so the WBS graph seemed to indicate).

And, while there macroeconomic policies – or at least the policies on controlling official rates – may differ, it seems that Australia (HT political fiend) and Japan may well have in common a massive blowout in the public budget. On Monday the Hatoyama Cabinet was being subjected to questions and patronising remarks by LDP lawmakers as I tried to recover from jetlag after a delayed flight from Copenhagen. I only imagined the same thing was happening in Canberra, if only I could get off the couch to switch on the live feed from parliament…

Again, the difference is that Australia’s blowout is real; the Hatoyama blowout is still only on paper, for now. But let’s not forget the LDP has rung up public debt in the neighbourhood of 200% of GDP before the DPJ took power last month.

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