Without going into the details of the many proposals now being discussed at the global and national level for reforming macroeconomic structures and policies, pragmatism leads to the conclusion that the present globalised financial market structure is by its nature unstable, unpredictable and, with all its virtues and advantages, at times very disrupting for domestic national economic policy objectives.
Banks responded to the November increase in the cash rate with substantially larger increases – around 40 basis points – in interest rates on housing loans. The size of this increase, and the controversy it created, seemed to have a noticeable impact on household behaviour. Consumer confidence fell, though to levels that were still above average.