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.
On this episode of What’s the Point?, Richard Denniss explains what’s really driving inflation in Australia and why interest rates aren’t actually the only way to control it.
This episode was recorded on Friday 11 September.
Host: Richard Denniss, co-Chief Executive Officer, the Australia Institute // @richarddenniss
Host: Anna Chang, Managing Editor, The Point // @annachang
