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Joke from RBA boss falls flat

Joke from RBA boss falls flat

A comment by the head of the RBA that caused a sharp fall in the Australian dollar on Wednesday was just a lighthearted remark, his deputy says.

If Reserve Bank boss Glenn Stevens was trying to make a joke, it wasn't very funny.

The Australian dollar fell to a three-year low after Mr Stevens told a business function on Wednesday that the RBA had deliberated for "a very long time" before deciding to leave the cash rate at its record low of 2.75 per cent this month.

The comment was interpreted by many as a sign the cash rate came close to being cut, improving the chances of a cut at the next meeting in August.

But RBA deputy governor Philip Lowe said on Thursday the governor's comment was an attempt at humour.

But the "joke" didn't elicit any laughs from those in the room at the time, nor has it since.

It immediately sent the Australian dollar below 91 US cents to its lowest level since September 2010, and even drove ANZ's economic team to revise their forecast for interest rate cuts this year.

"The `joke' was important in our decision to add a further rate cut in August," ANZ economists said in a statement on Thursday.

"Given this information has been shown to be false, we should revert to our view of the day before yesterday that the RBA will cut rates again, but probably not until slightly later in the year."

Dr Lowe said the comment had been misinterpreted.

"I can confirm for you that the board did deliberate for a very long time," he told a business function in Sydney.

"I can also confirm for you that it always deliberates for a very long time.

"The governor's remarks were at the beginning of his speech, they were meant to be a lighthearted remark after what he reports to me was a very lighthearted introduction.

"Some people in the financial markets and perhaps the press have misinterpreted the intention of those remarks."

AAP chief economist Garry Shilson-Josling said the comment could best be described as a mistake.

"I'm sure if Mr Stevens could have his time over again he would not have said what he did, or at least made it clear that he wasn't intending to convey any information about monetary policy," Mr Shilson-Josling said.

"He did introduce his speech with a couple of jokes which the audience obviously found quite amusing, but the recording of the speech ... shows there was absolutely no laughter whatsoever after he made his comment about the length of the RBA board's deliberations.

"Central bankers know very well that people in financial markets will be going over their comments with a fine-tooth comb.

"I suspect that Mr Stevens will be much more careful with his choice of words in future."

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