The Federal Treasurer today agreed that Australia’s financial institutions are “certainly independent” of the government. “But… when the official interest rate goes down… then borrowing costs should follow, it’s really that simple,” he told ABC Television.

It’s all very well to talk up co-operative industrial relations but if one party, in this case Telstra, a very big and powerful employer with a massive amount of market share, does not want to co-operate, you won’t get where you want to go. It takes more than good intentions, gently delivered.

If the banks ignore all the free advice about how easily they can afford to pass on an official interest rate cut, the Rudd Government will find itself under pressure to find some way to make good on its threats.

As the Rudd Government prepares to release special reviews into car and textile industry assistance, the Productivity Commissioner has criticised plans to delay tariff reductions and increase government subsidies to manufacturers.

Following yesterday’s board meeting, Reserve Bank governor Glenn Stevens announced the bank’s new position in a prepared statement. “The board’s view is that scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing,” it read.