I’ve never really understood the rationale of increasing interest rates when inflation is being driven by international events rather than discretionary spending. Just seems dumb.
the RBA has two tasks (in setting interest rates, lots of other jobs though) , inflation in a narrow band and employment in a narrow band.
They have one tool to do that. Short of a significant uptick in unemployment, there is no choice left. The main way to bring inflation down is to crash the economy, they prematurely congratulated themselves for reducing inflation and keeping the economy ticking last time they rose rates and yet they didn’t get it under control at all.
Inflation was high before the current Trump and Bibi tanty.
is the system poorly diesgned ? for sure and with this level of simplicity, we could do away with all this performative theatre and replace it with a spreadsheet.
Explain the out of control inflation before the war then……
We are pretty much the only western country in the world who RAISED interest rates before the war. Every economist has been saying for months and months that the inflation is mostly caused by the out of control government spending.
Those calling for government cuts – mostly long-time advocates of smaller government – claim this would lower inflation, and as a consequence reduce interest rates.
In fact, claims that government spending is now a very large share of the economy are exaggerated.
the current fiscal settings are not the primary cause of the uptick in inflation.
But the current fiscal settings are not the primary cause of the uptick in inflation.
Those calling for government cuts – mostly long-time advocates of smaller government – claim this would lower inflation, and as a consequence reduce interest rates.
In fact, claims that government spending is now a very large share of the economy are exaggerated.
Can’t wait for the interest rates to go up to “curb our spending” on basic necessities. 🙄
I’ve never really understood the rationale of increasing interest rates when inflation is being driven by international events rather than discretionary spending. Just seems dumb.
the RBA has two tasks (in setting interest rates, lots of other jobs though) , inflation in a narrow band and employment in a narrow band.
They have one tool to do that. Short of a significant uptick in unemployment, there is no choice left. The main way to bring inflation down is to crash the economy, they prematurely congratulated themselves for reducing inflation and keeping the economy ticking last time they rose rates and yet they didn’t get it under control at all.
Inflation was high before the current Trump and Bibi tanty.
is the system poorly diesgned ? for sure and with this level of simplicity, we could do away with all this performative theatre and replace it with a spreadsheet.
Banks need more money to cover the losses they had when it middle east went pear shaped, again
/S
When the only tool you have is a hammer, everything looks like a nail.
Inflation isn’t being driven by international events, it’s being driven by government spending.
So what does glue taste like?
Explain the out of control inflation before the war then……
We are pretty much the only western country in the world who RAISED interest rates before the war. Every economist has been saying for months and months that the inflation is mostly caused by the out of control government spending.
that is not true, some economists did, others did not, as is the way for economists.
https://theconversation.com/is-federal-government-spending-really-to-blame-for-higher-inflation-its-not-clear-cut-274961
Hmm, have you missed the last 6 weeks per chance ?
Did you miss the interest rate rise due to inflation before the war?
here’s am analysis from before the war
https://theconversation.com/is-federal-government-spending-really-to-blame-for-higher-inflation-its-not-clear-cut-274961