Booney wrote:(Bit of a self confessed economic dummy here)
The reserve bank lowers the cash rate to give the average punter more money to spend (if the banks pass the drop on) to stimulate the economy because it has slowed or stalled, yes?
The tax reform, currently being pushed through ($1080 to people under $146,000 pa?) seems like an economic stimulus plan, as in a way the government can aid economic growth by handing money out, yes?
Correct. Ideally you have Fiscal (taxes and the budget) and Monetary (interest rates) policy working together to stimulate (when the economy is flat) or cool (when things are growing too quickly) the economy together. Right now, we have both trying to work together to stimulate the economy.
Fiscal policy is controlled by the government of the day.
Monetary policy is controlled by the independent RBA.