Oz commodity bubble (provides inflationary pressure) created by expensive exchange rate only and not necessarily demand. Expensive exchange rate created as foreign dollars buy up AUD to get 4.75% cash rate. Cash rate controlled by RBA.
Commodity price hikes give false impression of over heated economy (inflation) which traditional thinking has RBA needing to hike further. Double edge sword maybe requires thinking in reverse requiring heavy rate cuts to take AUD off investment radar. Commodity prices drop, exporters get relief saving jobs. Economy ticks properly.
Maybe RBA want a commodity price hike to help a carbon tax argument, at same time deflating property bubble, i dont think its going to work and at some point it will get stuck which is fine but why put us through it in a highly volatile way. I'll shut up now :)
