Domestic data does not support the decision to raise interest rates. Being wrong in the right company (the market and conservative economists) might make for easier dinner parties and congratulatory op-eds in the financial pages, but it does nothing to look after the welfare – economic and otherwise – of the Australian people.
Inflation in August rose from 3.5% to 4.0%, which might make you think the RBA had a point in raising interest rates yesterday. The problem is that all of the increase was due to petrol prices.
The Reserve Bank should use Gross Domestic Regeneration to distinguish imported oil shocks from domestic inflation – and avoid compounding the damage.
There’s a war on Iran choking global oil supplies, an artificial intelligence boom, and a US president torpedoing the global trading system, but inflation simply MUST be normal, according to the RBA.
On this episode of Dollars & Sense, Greg Jericho tells Skye Predavec that households will struggle “for not much good” because of the Reserve Bank’s latest interest rate hike.
