The simplicity and transparency of this equation is a major plus, but it has to be acknowledged that the problem of the simultaneous policy reaction has not been entirely overcome. (rba.gov.au)
«However, using the rules as reference points and discussing why our policy may differ from these policy descriptions could go some way in helping to explain our own policy reaction function to the public.» (cnbc.com)
The answer is, of course, that there is a positive policy reaction relationship from expenditure to interest rates — when activity is high or growing fast, policy will be tightening so interest rates are rising. (rba.gov.au)