The UnOz’s Person of the Year award is one of the most anticipated events of the year, with defamation lawyers everywhere especially keen to see the list. 2023 was a year like no other. For Australia it felt like a... Read More ›
rba
The Reserve Bank of Australia has taken a break from kicking mortgage holders in the groin to call on the Nation’s defamation lawyers to reign in their spending as inflation is on the rise. ”These millionaire defamation lawyers need to... Read More ›
Opposition leader (for now) Peter Dutton has called upon the Albanese Government to appoint former Minister for everything, everywhere, all at once, Scott Morrison, as Governor of the Reserve Bank. ”I don’t want to see some qualified public servant or... Read More ›
Opposition leader (for now) Peter Dutton has demanded that Indigenous Australians apologise to the Nation’s mortgage holders over the rise in interest rates seen over the last year. ”Before we started talking about the Voice interest rates were low and... Read More ›
The Opposition’s shadow Treasurer Angus Taylor (yep, him) has called on the Government to explain why the country relies on a Reserve bank instead of an actual playing bank. ”It’s high time Treasurer Jim Chalmers explained to the Australian people... Read More ›
The Reserve Bank of Australia has ruled that all mortgage holders in Australia must receive a kick to the groin each month in a move that is designed to put a hold on inflation. ”We saw yesterday with Valentine’s day... Read More ›
There are four economic wildcards between now and the election, and we know exactly when each will be played.
The first is this Wednesday at 11.30am eastern time, when we get the official update on inflation. We’re likely to see a figure so large it will take many of us back to the 1990s, to a time before anyone under 30 was born.
With the exception of a short-lived blip following the introduction of the goods and services tax in 2000, inflation has scarcely been above 5% since 1990.
One of the stranger things about the Reserve Bank’s announcement of why it’s lifting interest rates by 0.25 percentage points is that it suggests inflation will come down by itself.
“A further rise in inflation is expected in the near term,” the RBA says, “but as supply-side disruptions are resolved, inflation is expected to decline back towards the target range of 2-3%.
So why raise rates now, for the first time in more than a decade? The bank says it is about "withdrawing some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic”, which is fair enough.
But our latest burst of inflation is weird, and resistant to rate hikes. If the Reserve Bank isn’t careful, too many more rate hikes like this might help bring on a recession.
The biggest question relating to the management of the economy right now has nothing to do with next week’s budget. It has everything to do with the Reserve Bank and the board meetings that will follow it.
The question facing the board – the biggest there is when it comes to how the next few years are going to play out – is whether to hike interest rates just because prices are climbing.
On the face of it, it seems like no question at all. It is widely believed that that’s what the Reserve Bank does, mechanically. When inflation climbs above 3% (it’s currently 3.5%) the board hikes interest rates to bring it back down to somewhere within the bank’s target band of 2-3%.