If the governments of Australia cannot execute a meaningful cut in government spending quick smart, a real interest rate above 3 per cent cannot be ruled out.
What we could be seeing playing out this year is the start of an epoch-defining provocation of the gentle giant due to the artificial intelligence boom.
An increase weeks before the start of the spring selling season would draw a much clearer line between monetary policy and the troubles in our housing markets.
The fear of “crashing the economy” by raising interest rates too much pales in comparison with what is emerging in Australia’s political economy.
Until Australia’s economic policymakers can articulate how unemployed labour resources are not the result of deficient aggregate demand, they will remain hostage to ideologues.
In a perfect world, rates should not be raised at a time of energy, military and geopolitical uncertainty. But our macroeconomic policy has been far from perfect.
Budget cuts are needed not for its own sake but to lessen capacity constraints on private sector investment, innovation, and productivity.
Australia’s monetary policy board is letting us down. It must get serious about inflation or state that its primary mission is to keep unemployment down.
It’s risky to treat this surge of inflation as a blip. The RBA needs to begin tightening now to avoid a much greater squeeze later.
The governor needs to say it as it is: in the absence of a significant shift in the trajectory of the economy, we will probably need to raise the cash rate.
The rise in unemployment reflects a mismatch between the skills that Australian workers possess, and those that employers require.
The prime minister’s part in the battle between left-wing political economists and advocates for the scientific method in economics remains relevant today.
Despite a genuine boost to real disposable incomes, Australian consumers are unwilling to loosen the purse strings in a meaningful way.
The window for interest rate cuts is closing; the RBA will likely announce one this week, but it will probably be the last rate cut for some time.
The inflation fighter deep inside Michele Bullock has resurfaced, and the RBA has reminded everyone that restoring price stability is the main game.
The board has broken the sacred rule of modern central banking: do not pump prime the economy before an election, particularly when there will be a cost to all Australians.
The central bank would be well advised not to misjudge the politics. An easing of monetary policy would put more jobs and more inflation into the economy. Is that what people really want?
The arguments put forward about why interest rates should be cut immediately simply do not stack up.
Bond traders are fully priced for some relief by April 2025 thanks to a couple of surprising data points. But it’s always the coldest just before sunrise.
The RBA has an important job this week in communicating how inflation is behaving behind the distortions caused by government subsidies.
