This is another example of European issues affecting the local market, as the widening is partly a function of the lower volume of Kangaroo issuance in recent months. The Kangaroo issuers seek to swap the $ funding they raise back into foreign currency, while the Australian banks do the reverse with their foreign currency raisings.
In view of this, the weight given to the individual information variables should depend on how precisely those variables are measured. This is especially applicable to variables that are not directly observable, but which are relevant for policy formulation, such as the potential output growth and the equilibrium values of the real unemployment rate and the real interest rate.