Rates rollin' along

A snappy return to the normal rate of interest, being the long run rate of interest, may be on the agenda of the RBA board tomorrow.

They're scientists, that lot at the Reserve Bank, and they may be asking the right questions.

Such as how much more popular might Scott Morrison's government be if the high yield at call rate was dancing around 4 per cent and term deposits began with a five.  

More likely they'll be playing catch up with the Reserve Bank of New Zealand at the board meeting this week, with a probable cut in the cash rate target to 0.75 per or even as low as 0.5 per cent.

It's only the high jinks of the Sydney property market that are holding off a much needed follow up to the monetary stimulus begun this year.

A small open, commodity-laden economy with a floating exchange rate and also with a history of calamitous recessions, Australia is ready and ripe for lower interest rates. But for a strategic period of time only.

Inflation? Remember, we're flexible on that now.  

How different would incomes and aggregate demand be under normal interest rates?

Better off probably, and Philip Lowe's RBA is taking Australia back there sooner than most reckon.