The RBA`s struggle about what to do

While there is no immediate need to slow the housing recovery, in the end the housing market will only be controlled by some regulatory changes to contain the freedom of financial institutions to lend, or by some great big new tax (gasp!) on financial transactions.

The Australian economy is in a very interesting place, and one hopes the RBA fully understands the problems it faces and is communicating effectively with the Treasurer.

However, its failure to deal effectively with illegal dealings in plastic banknotes with the late unlamented Saddam Hussein makes one wonder at its ability to handle more than one important matter at a time.

'We know how to push (or pull) the interest rate lever, Treasurer, but don't expect much else from us' may be the cry. If so, will a presumably demoralised Treasury Chief raise the matter of asset inflation at the meeting of the RBA board tomorrow, and with the Treasurer at the next opportunity?