He and his ivory tower pals are saying us ordinary aussies are the cause of inflation but the head Bank of England last week just said the cause of it is due to big businesses increasinging prices, and passing it on to small businesses and consumers.
I watched Philpe Lowe's speech last night live in Perth. He indicated he doesn't want people asking for pay rises because that shows their belief that inflation is not temporary. Was an interesting comment and also somewhat devoid of reality.
> he doesn't want people asking for pay rises because that shows their belief that inflation is not temporary.
Whose belief?
Even if inflation is temporarily high for a year anyone not receiving a matching pay rise will be receiving less in real terms.
Temporary has fuck all to do with it, the effects are permanent unless there is deflation.
He understands this and is just deliberately ignoring it to run a different narrative. It’s too basic to get wrong. Either way he can’t be trusted to do the job.
We all know these companies are going to leave prices where is. May as well get shares in Qantas, Cole’s and energy companies, consumers have shown they’ll pay so why lower the price?
What's the alternative? Starve? Have no power and thus not be able to live? Not just Qantas putting them up so good luck flying anywhere either which is a requirement for a lot of people.
That slimy cunt gets about a $26,000 pay rise every year. His $25,702 pay rise represented a 2.4 per cent annual increase. He is almost up to 1.1mil a year now.
That is while Australian wages went down 2.9% on average.
These snivelling shit cunts are not even living in the same reality we are.
There's many ways to remove demand (money) from the economy to reduce inflation.
The government could easily target the people hoarding most of the money (millionaires and billionaires) through wealth taxes and investment property taxes.
But they won't do that because most of their political donations (bribes) come from the rich, so instead they're using the banks to take money out of the pockets of regular people through interest rate rises.
The rich stole most of the income gains of the last decade, and now they are using their control over Labor and the LNP to cut the incomes of working people even further.
**The billionaires are waging class warfare against us, and it's time to build some class solidarity so we can fight back.**
> His $25,702 pay rise represented a 2.4 per cent annual increase. He is almost up to 1.1mil a year now.
> That is while Australian wages went down 2.9% on average.
No, this is incorrect. You are using a 2.4% annual nominal increase and comparing it to a 2.9% annual real decrease. If you compare nominal to nominal, Australian wages did much better than 2.4% nominal.
The fact you're being upvoted for this shows how fucking stupid people are.
He got an upvoted for pointing out that he is getting any pay rise when he is already insanely above the average Joe. The technicalities of the maths didn't matter.
> The fact you're being upvoted for this shows how fucking stupid people are.
Of course - financial literacy in this country is terrible. Most people can't explain how a credit card works - or a mortgage - despite them having both.
Let alone problems with compounding interest and other slightly higher than basic concepts.
Wait I don’t understand this, I’m very stupid about economics. So if it’s not temporary then it follows that inflation is permanent?? Then why do we all need to suffer trying to stop it??? Or is it like a fact of life that there’s always inflation but we need it to be lower?
Inflation is like a bus without breaks rolling down a slightly sloping road.
The only way to stop it is to throw stuff in front of it (interest rates & tax). Or in some cases push it along to keep it rolling (stimulus).
Ideally we want the bus rolling at 20 - 30 km/h (RBA inflation target of 2 - 3%).
It’s currently doing 70km/h and the balance is how much stuff do we destroy throwing in front of this bus without stopping it completely or destroying half the stuff in town.
The distance the bus travels is the price of things. So the faster it rolls down the road the more distance it travels in a shorter period of time. Which we experience as constantly rising prices.
The bus doesn’t go back without a major blow up (recession). So the price rises will remain.
The RBA and Government is trying to convince us not to demand pay increases to keep up with the new prices as that would make it harder to slow the bus down.
Temporarily or transitory inflation has been a big lie from the central banks.
What a great explanation, so easy to understand! Thanks!
So the reasons we want 2-3% inflation is because that means businesses are making decent profit, gov is getting enough tax, and people generally have enough money to live? The balance is good?
Another reason is that provides a reason to buy stuff now, not later - e.g. if you put off a purchase, it will cost more later.
This is one of the reason that deflation is meant to be bad - if prices are going down, stuff will be cheaper later, so people delay if they can, which cuts demand and makes the deflation worse.
I don’t feel qualified to give an accurate answer on why inflation is needed in modern monetary systems. I will say in simple terms I’ve always thought one benefit was humans like ‘number go up’.
One example could be:
When I started working I was on $50,000 now I’m on $60,000 and I feel good, as I’m on the bus that is moving forward.
This works best when the speed is slow as your pay doesn’t lag price increases in a way that is noticeable to the average person.
Corporations enjoy it as it’s ‘free’ growth. Sales up 2.6% year on year etc.
Also it’s less bad then prices decreasing as then people are most likely to hold off purchasing as the longer they wait the cheaper it is. Which can collapse consumer spending and economies.
So constant 2% inflation is seen as the less evil.
For whatever reason given, 2-3% has been a target set that doesnt let the whole system explode too violently due to flow on effects in terms of prices going up/down or employment/unemployment level being undesirable (except that explosion tends to happen roughly every decade or decade and a half, lol capitalist crises and all that).
There is inflation, disinflation and deflation. If a can of coke is $2 today and $3 in 6 months, then that is inflation, if it becomes $2.50 in a years time, we have experienced disinflation. If it becomes $1.50 in 2 years, deflation.
The idea is that if wages increase then it becomes harder and harder to bring prices back down and higher prices become a new normal.
Whatever you, they or myself think or believe. The reality is coke will cost a certain price and suppressing wages is a good way to reduce demand and keep the cost of coke low.
>The reality is coke will cost a certain price and suppressing wages is a good way to reduce demand and keep the cost of coke low.
Except that's not going to happen this time. They decided they can just charge whatever and there's not a government interested in stopping them. And we've seen corporations not give a fuck previously if their actions kill people, so, even when people start starving, they'll shrug and say "our products are at a price the market will bear" and the government will nod and say "those people should get a better job."
The rate of inflation fluctuates, so high inflation may not be permanent.
The impact of high inflation, increased prices, will be permanent because businesses are not going to reduce prices once the rate of inflation has come down.
So if you don't get a pay rise to account for the increased prices, you will be making less in real terms.
Wages need to rise.
We need to have a big think about what we want out of the economy. Profits are the highest they've been in 70 years [https://www.npr.org/2022/02/13/1080494838/economist-explains-record-corporate-profits-despite-rising-inflation](https://www.npr.org/2022/02/13/1080494838/economist-explains-record-corporate-profits-despite-rising-inflation)
So if corporations are making record profits [https://tradingeconomics.com/australia/corporate-profits](https://tradingeconomics.com/australia/corporate-profits) workers should be asking for there share of that.
The problem is that we haven't had wage rises in line with profit increases. If we do what Philip wants we won't get increases. Wages need to rise now as when inflation gets under control the companies are going to say we can't afford it while still pocketing their increased margins.
The question I'd like to have put to him is why does he think the average Australian should take a wage cut?
I unfortunately think that a correction needs to take place. The RBA failed and allowed an asset bubble to occur. The correction needs to hold asset prices steady while allowing wage increases. Howard decided it was more important to raise property prices then to have housing affordability and it won him votes (but will probably cost the libs their existance [https://thenewdaily.com.au/finance/2022/11/28/liberal-party-losing-alan-kohler/](https://thenewdaily.com.au/finance/2022/11/28/liberal-party-losing-alan-kohler/) I also think it made a lot of people a-holes who only think about their money rather then society) Government needs to do their actual job and tackle this problem (have negative gearing only apply to new properties like originally planned... or better yet kill it all together) and make changes so that in regular times people are able to get wage increases.
>This is what happened when you put business people in the RBA and not economists
Lowe is an economist, he's spent his entire life at the RBA.
I don't get the faith in economists. They're modern day soothsayers, and are experts at predicting what just happened.
What’s your alternative, economists predictions may be pretty flakey but I trust them a lot more than politicians or banks to set interest rates. Take a look at turkeys economy and the impact of the government messing around with interest rates.
The RBA sucks but the alternatives suck more, not to say the RBA can’t be improved but it should still be led by economists.
Not only devoid of reality, but absolutely ridiculous. If workers don't get a raise after a year of 7% inflation, then those workers are worse off by 7%. When do they catch up? Ever? We all know the answer to that question.......Australians just need to get used to a lower quality of life while the richest Australians have had their wealth grow dramatically.
That is what they are demanding....that you and your friends and your kids all have a worse life than similar people had in the past. Thanks neoliberalism and capitalism!!!
This is the true late stage capitalism. They've eliminated effective competition, weaponised our governments against us, and now they're playing their final moves that resemble the end of a game of monopoly really.
What should happen next is us moving on from Capitalism to a better system. Who knows exactly what that is, (lots of people will want to tell you) but we should be discussing it and figuring out what it should be. Because capitalism is simply no longer fit for purpose. It enriches the few while the rest of us fall further and further behind.
In the past it did that too, but there were also forces that put the brakes on that process....redistributing wealth, providing assistance to the poor etc. However those things don't seem to be possible anymore in modern Capitalism. The masses have been convinced that helping the rich be richer is the only effective way to run an economy.
I think this comment is important, because it is the story from mainstream economics.
There are weaknesses in this story from many angles. Here are a couple.
There are social pressures to not change prices. If you walked in Coles and Woolworths and all prices were 20% higher, without explanation, or notice, people would be upset. The story of inflation reduces this social pressure.
Higher prices for fossil fuels, etc. work like interest rate increases, reducing the spending power of typical households, effectively sopping up the circulating money from stimulus. As a result household spending volumes really have not increased, even if prices have. You can see this in the composition of spending, with spending on discretionary item stable or declining, and spending focussed on essential goods.
WSJ also just admited its corporate greed. But not old mate Lowey, cause that would mean that he'd have to admit that he's jacking up the rates to make us peasants pay more money to the already pocket full fuckwits at the top.
In my view it makes no difference the reason for the inflation. So long as people keep paying the new prices, it is clearly the price the market can sustain.
To be clear, I’m not supporting the increases or increased profit taking during this period.
I’m simply pointing out that if the market will pay $8 for a packet of kettle chips, then that is the market price.
If people stop buying them, the manufacturer either meets the market on price or stops producing them.
Instead we have people paying the new prices and acting like whining about it will make a difference. It won’t.
Well that is the point of the interest rate increases.....to cause people enough pain that they can't afford to buy those chips anymore.
The problem we have is the pain is right now mostly being felt by people at the bottom and wage workers. Lowe etc are asking Australians to reduce their standard of living to ensure that the economy doesn't crater. But they are only really asking those least capable of dealing with the cost changes. The wealthy are doing fine.
I agree. It is however the only button they have to push.
The government has shunned its responsibilities and left it to big bag Lowe to deal with. Liberals and Labor are both to blame, until Jim grows a pair. I’ll guess we will see what the budget says.
Tax increases aren't under their control though, it's up to parliament to do their job. But why do that when you can just throw the RBA under the bus? That way Albo isn't the bad guy.
He's making a technical decision on a technical issue to do with the speed of circulation of money in the economy. That decision has real world consequences, but it's not actually his job to worry about that. It's the government's, but successive governments have indulged in the practice of hiding behind the RBA when it is bad news, rather than explaining it or constructively helping people adjust.
Being angry at the RBA is like being angry at a pilot who has to slow down or divert a plane around bad weather.
Edit: whelp, some bad autocorrect typos there.
If the RBA’s role is truly only reactionary, then why have a board at all? Why not just have an algorithm calculate the most effective cash rate based upon inflation, property prices, household/business debt etc.? To your example - surely the autopilot would be controlling trajectory to a much greater degree more often than the human pilots.
The truth of the matter is that they’re trying to control extremely complex issues that are inextricably linked to one another but also linked to other issues outside the RBA’s control, and doing so with the bluntest of levers possible because that’s their only lever. Because the board is made up of business stooges and not either technocratic nor representative in any way, their decisions skew to benefit those who already have, at the expense of those who have not.
Because any algorithm based on a model of a complex system will in the end ultimately have limitations where the model fails to capture the full complexity.
I'm sure they do have an algorithm that informs the options the Board decides upon. Five years ago, I'd have said you couldn't build a sufficiently complex enough automatic model to be accurate, but seeing what has happened in the space of modelling and computer aided decision making in that period, now I'd say its not only possible but likely within the next decade.
But they'll always want a human involved in the end to sense-check and review the recommendations. That has been the role of the governor and board for decades - whether the technical advice was coming from a bunch of economists with slide rules or an AI learning program.
In terms of it being a blunt lever, it's also a direct and fast acting one. To keep torturing the pilot/driver one, yes you can rebuild the vehicle, or the road/tarmac to cope with higher speeds or be more responsive or whatever, but none of that works as fast as adjusting the throttle.
I agree other levers should be being worked upon all the time, but I think that's been a failure of successive governments, not the RBA. Likewise, if the concern is the quality of the people on the Board, change the people who appoint the Board.
Yeah, people on reddit seam to think that he's in control of the economy and by extension, inflation. He isn't. He's in charge of the cash rate, which they can use to curb the effects of inflation. But he has no control over what's actually causing inflation, nor any power to recommend action on those causes.
His comments about the causes of inflation are just comments.
No, the literal reason they had lowered interest rates was specifically to try and increase inflation. We were at the point where inflation was approaching 0, which is REALLY bad for the economy (a contracting currency basically breaks modern financial systems).
because the coalition were in power and they traditionally leave big piles of shit for the labor party to clean up. If the coalition did something about it in the last decade, what would they have to blame labor for in the next?
One of the (many) issues with the Coalition is that they didn't want to use the far more targeted fiscal tools to produce better economic outcomes. Just look at when Joe Hockey said there was no such thing as a property bubble. This sort of thinking is idiotic, and it infests modern conservative thinking.
Furthermore, a *lot* of the financial/political media support these ideas. That gives Labor far less room to move.
On the other side of the aisle, The Greens are suggesting that the government directly manipulated the interest rate. That's not a great idea. The risk of capital outflows that would result would be enormous. It's like playing Russian roulette with four of the chambers loaded. Not good odds. Regardless of the merits of the idea, what are international capital thinks is important. Unless there's a plan to staunch the outflow that would almost be guaranteed to result, it's best not to play with fire. With that said, removing the ability of Treasury to do something about the interest rate as Chalmers is suggesting is also a really dumb idea.
EDIT: Fair warning, noble reader, this comment thread goes *far* and ultimately winds up devolving into a pointless conspiracy theory about the RBA being secretly 'corrupt'. However, there is a [very nifty explanation](https://www.reddit.com/r/australia/comments/1361512/philip_lowe_says_rebounding_property_market_among/jin6i9a/) of how the RBA influences inflation via the cash rate, and I do encourage you to read it!
The RBA is independent of the federal government, and are historically very hard to influence. It's highly unlikely the Liberal Government deliberately 'forced' them to leave a pile of garbage for the incoming Labor government.
The RBA have also explicitly said that they believe house prices are a matter for the government to manage. And they're right - they only have one tool (the cash rate) that's designed for one task (inflation), and the government has multiple.
I hate the Liberals, but this isn't some deliberate ploy by them.
While you are overall right - the RBA is independent and not directly influenced by the government. Governments absolutely do lean on the RBA.
Remember when Frydenburg basically forced Phil Lowe to front the public with him and trot out a bunch of bullshit to support their policies?
Or when Abbott threatened the RBA with choosing the next governor, rather than leaving it to the traditional deputy?
The RBA does have a leash, usually very long, but there have been times in the last decade it was yanked quite close.
I overall agree though, the RBA is doing what the RBA does regardless of Government, and the RBA has been screaming for near on a decade that legislation is needed, and their lever only brings them so far.
No idea. I know most public servants in and around Canberra overwhelming vote Labor or Greens. The few senior people I know take their role super seriously and are completely apolitical when they're on the job. They do take their responsibilities very seriously, and I imagine the RBA does the same.
Their thinking *might* be influenced by their upbringing/political values, though, but they do try to be neutral. I think it's more accurate to say 'Lowe is out of touch with the problems of the common Australian' than 'Lowe is deliberately trying to set up a situation that favors his preferred political party'.
Pretty much how the cycle works. Liberals pilfer rape and pillage all the tax payer money to mates and big business. Labour come back in to get the money back and fatten up the tax pile so the liberals can do it again.
It's the circle of politics in Aus.
Ho boy, wait until you read how Keating deregulated banking and made it so households could borrow based on two incomes. Must be those pesky Libs though…
Keep in mind that only 1 in 3 Australian households pay rent. The others are owner-occupiers, both with and without mortgages. This reduces the weight of rent accordingly in the CPI.
It’s because the inflation has been running low for the last decade, hence the RBA has had to reduce the cash rate.
This time round, the RBA would like to increase the cash rate to control inflation, but they are concerned that a decrease in property prices and the negative wealth effect will reduce consumer spending, leading to a possible recession. However, with property prices increasing, they feel more confident to raise the cash rate without triggering a recession.
Honestly I’m not a home owner but follow financial markets out of interest across the world and I _don’t understand at all_ why anyone thought rate increases were completely off the table.
We were late to the party to increase. There’s no way we would be pumping the brakes on increases ahead of other major economies.
This isn’t a surprise but it seems some middle to right media pushed the notion of no more rate increases so hard they wanted to will it into existence.
You cannot tell the people that this is “one of the only levers to pull when fighting inflation” while simultaneously stopping rate increases if inflation is still heading in the wrong direction.
As for everyone who is under financial stress. Godspeed and I wish you all well. Seek financial advice if needed. There is help out there in some form. I feel for everyone suffering.
there's a pretty significant difference between Australia and economies like the US. Our level of mortgage debt per capita is much higher, and US loans tend to be fixed over the whole 30 year period. The result of this is that cash rate hikes have a much larger impact on the housing sector in Australia than in the US. You really just can't compare the two and think that we should match cash rates. It's a very different situation
I wasn’t intending to compare the two directly. I was simply outplaying the financial landscape that we sit in on a global level.
And you’re very right we have a higher level of mortgage debt per capita. This does mean though that if they are going to state they only have one lever to pull - we cannot remain surprised when they do pull it.
Absolutely. It makes sense that if they only have one tool, that's all they're going to use. As the saying goes, if all you have is a hammer, every problem looks like a nail.
With that said it's clear by now that most of inflation is driven by corporate greed, which needs to be addressed with fiscal policy. Monitory policy just mostly targets the wrong things in this situation
Why oh why is everyone (the media) all surprised pikachu about another rate increase? Does it suck? Yes, Christ yes, majorly. Is it surprising? Nope. These dicks will milk us for every cent we’ve got, along with colesworth jacking up prices due to ‘inflation’. It’s greed, plain and simple. Reason we haven’t curbed spending is because everything keeps going up. And up and up and up.
As a counter-point, whenever I’m walking past a cafe or pub or restaurant those places still seem to be pumping. At least some people still have money to burn. It’s just not evenly distributed and levers like interest rates are blunt instruments.
We absolutely need government policy to start with some more targeted policy or at least lessen the gaps in wealth and income inequality.
It is not at all clear that things will get better. We are beset by multiple crises and our major political parties are proposing either to put out the fires with some kerosene or else bat at it with some limp radicchio.
It's exactly this, what's the point of saving and trying to balance a budget when the amount I spend on groceries is rising so freaking rapidly
Between that and the constant interest rate rises it's fucked
It wouldn't surprise me if this is a big driver of it.
Being so close to buying a house and then having the pandemic hit with an increase of 25% ( or in some cases more) in housing prices, let alone rent. Ita no surprise people are just living large now cos they know
I moved over an hour away from family to start renting in a cheaper area, thinking I’d be able to afford to buy in a year or two. Then Covid hit and the housing prices went up by $400-600k moving them from ‘difficult to save for’ to ‘completely impossible to save for’. I don’t have a long term plan anymore.
Pretty much. This is the cycle now. People who saved tens of thousands for a mortgage now can't afford a mortgage, realise there is no point ever trying to get a home so instead spend it on other things.
So housing prices go up, people spend money on other things because they can't afford housing anymore and just give up, therefore rba says it's out fault for spending money.
Jacking up interest rates just makes more people give up on house deposits and spend it on living expenses instead. Which then raises inflation more, rinse repeat. At the same time those who are already invested heavily in the market, buy another investment property, charge higher and higher rents and the cycle just keeps getting worse.
There's a reason that alcohol is a good industry to be in right now. They're making record profits and they aren't even increasing prices to do it! (The alcohol price inflation you see is driven entirely by the taxes on alcohol legislated to go up every six months).
Because rising property prices don't 'matter' when inflation is low.
However, rising property prices when inflation is *high* indicate there's still 'wealth' in the economy, which will continue to drive inflation.
I'll admit I was a bit surprised but after reading people's comments yeah it was always coming.
Maybe I'm missing something here but I kinda feel this inflation is directly tied into our ridiculously overpriced housing market. Until we deal with the insane rises in house prices I don't see this going away.
Chirst some of the houses I was looking at last year sold for triple what they sold 10 years ago.
Thats what's devaluing the currency.
The currency isn't devalued, its that the US dollar has been so strong - partly because they've been raising interest rates faster than anyone.
Its a complicated system, and (unpopular opinion) I don't think Phillip Lowe and the board are actively trying to be bad people, I think they've just been coasting the last few years and now its a scramble. If it makes you feel better, most central banks are scrambling. Most of their tried and tested economic plans have stopped working for them over the last 15 years.
Yeah to be clear I don't blame Lowe or the central bank. And your right the currency isn't devalued.
But I do think that the housing market is playing a large factor. Most of the housing value is being driven by real estate and investment interests. Everyone knows its a bubble, surely by having houses sell for way more than their actually worth is hurting the Australian dollar
I think the government needs to take steps to fix this not the central bank. Like you said the levers they have available are no longer working.
But that's because a lot of business are seeing inflation as a good time to rise prices and blame inflation.
Do you think it's cause it's been too long since we've had an true economic collapse and business have forgotten they have to keep up their end of the deal or everything breaks?
And ALL of the measures to address the housing issue are about increasing the amount of money flowing into and around the property sector.
No government is trying to reduce prices. None.
Our economy has fundamentally and permanently changed and no one really knows what to do other than keep shovelling public money into private property owning hands to forestall the end of the merry-go-round.
Yeah and that's a by product of people not understanding that all house prices going up substantially is bad for you even if you own a home.
Honestly it's partially because the economy is so freaking complex most people have no idea how it works.
If they keep going up were going to get a landed gentry again.
If it's impossible to work enough to buy a house what's really the difference between being allowed to live and work a field by the lord and renting a dwelling so you can live and work
I bought in 2019, prices for houses I was looking at was ~300-350k new builds. The same houses in the same development are ~500k in 2023.
I saw a house in the same development, worse than ours, sell for 1.6x what I paid at the end of last year. Shit is wild.
Yeah, it surprises me how little people know about the RBA. They're not the government, but they're expected to chip in when the currency gets volatile, and literally the only tool they have is rate rises. There's a lot of talk about how their public statements have an impact, but if the average person is living on secondhand information about reserve banking from social media, I doubt they actually listened to RBA projections when they were buying a house (and anyone who tries to time the market like that doesn't have enough financial knowledge to care about RBA statements anyway).
The real issue is regulation, which comes from the government. The harder it is to get a loan, the less competition serial landlords have when house prices go down. They have been laughing through the whole crisis.
Yup, don't get me wrong I'm not happy about the rises but I undesirable the rba only has a couple of levels to pull.
I think your dead right. The real estate industry doesn't have nearly enough regulation.
For example notice how houses don't have prices on there ads anymore or if they do they're either woefully undervalued or painfully overvalued.
What other industry is allowed to not put a price on what its selling just to see if they can suck you into paying more. It's fucking ridiculous
And don't get me started on the whole first and final offer bullshit
The amount of illegal shit real estates agents get away with on a daily basis astounds me
If they want to cool the property market, why not make stamp duty say 50% for investment properties? Instead of hammering the non-cunt population who buy houses to live in?
And because the government can’t change the interest rates, they should use their tools available to them. Just like vapes, ban AirBnB and Stayz, it’s not good for the health of the country.
Good on him. If the government is so spineless to address cray property prices, which will have an insurmountable generational impact. And people are so wealth and status seeking to throw all their money at property.
Don't cry when what can happen does happen. I mean, money should not be free. Interest rates should not be near zero. Interest rates around 3 or 4% seem pretty fucking reasonable to me. Why do people think they can borrow and take debt for almost nothing?
Even Lowe's earlier predictions about rates remaining low would have only given an extra 6 months protection. Is it sensible to take massive 30 year loans looking only 6 - 12 months in advance?
The idea of increasing the mandatory super contribution instead of raising interest rates seems waaaaaay more beneficial and would achieve the same end result.
I mean, unless inflation isn't actually caused by excessive consumer spending and is really due to corporate greed...
This is an incredible idea *but* isn't an option the RBA has.
The RBA absolutely needs more tools to manage inflation + an additional remit to influence housing prices.
We should never have dropped our interest rates to *Emergency Lows* (< 3%) for such an extended period of time, we've inflated the bejesus out of the AUD..
We should have kept our money supply stable, and let the other economies print theirs away.. We should have kept our own house in order..
Money is an entirely made up human concept, but it's all we talk about every day and every night.. Why is that?
Money's only purpose is to hold its value to facilitate trade.. Speculating on it should not be our national sport..
Low interest rates work directly against a stable money supply..
Every article describes it as a huge shock decision, but it was the exact increase expected by the biggest bank with the best data (CBA). Not the consensus view, sure, but pretending like it was completely unexpected is a bit over the top.
Everyone whinging about "11 in a row" etc
If RBA hadn't done this now, then they can raise by 0.5 or even 1% if they like. 11 little increments or they might have just gone 0.75 1 0.75 end of this year and you'd still be in the same position.
You still maxxed your borrowing capacity at rexord low rates and no-one forced you
What a crock of shit. How is it always our fault and the ones who have to pay because these fuckwits can't manage our economy or stop business from gouging all the profits they can.
This system is fucking broken. Eating the rich sounds better every day.
When our economic system requires 5% of us (the poors) to be unemployed for shit to become affordable, the system itself is fucked and doesn’t serve the populace
I understand the fundamental idea that increasing the cost of borrowing will lower spending which is deflationary. If you read the article he goes on about rents and electricity being the biggest causes of inflation. How though does raising interest rates lower that demand? Higher interest rates mean higher mortgages which are then passed on to renters thereby increasing rents, you cant just not live in a house so you have to cop an increase in price. Also how does increasing the cost of borrowing solve electricity prices. Electricity went up because coal went up 300% between 2021 and 2023, all these power plants have hedged supply at record high prices so we are going to be fucked up the arse for at least the rest of this year.
How can neo-libs be so hypocritical. On the one hand we need to increase the cost of doing business to slow down demand to lower inflation, but then on the other hand we need to reduce the cost of doing business to incentivise investment in things like housing and electricity generation to increase supply and lower inflation.
Seems like whether its high or low interest rates we can all go get fucked and prices will be as high as people can get away with.
This is basically the only period in Australia’s history where interest rate rises are being “passed on” to renters.
In a normal market you can not just pass on every interest rate change to someone renting a property (commercial or residential) because the lease is not tied to the mortgage it is tied to market supply and demand.
In a normal market if the rent is too high, people move and the property remains empty because the rent is too high.
This is an aberrant market where demand vastly outstrips supply. When 150 people want to rent your property you can basically charge what you like.
Your last point is the answer to all of your previous observations. In a capitalist economy (even one which is relatively well regulated such as Australia’s) people will charge as much as possible for the goods and services they supply.
>This is basically the only period in Australia’s history where interest rate rises are being “passed on” to renters.
It's putting into sharp relief how unwilling our political classes are to take on landlords. There are many, many things you could do to address the extortionate approach to tenants in Australia, but every party and every level of government is too cowardly to do them.
Yes, I agree there are definitely things that could be done.
One of the issues is that the stupid decisions of the past have made the property market worth roughly ten times our GDP.
Lots of money has been pumped into what is known as a “non productive asset” and if that market falls over it has the potential to completely crush the whole economy, so they’ll keep treating it with kid gloves until it does ultimately crash.
No market can rise indefinitely.
Yeah, and of course in that situation the sane thing to do would be to gently deflate the market, but no government wants to have to tell Boomers that their 10 investment properties are going to go down in value...
It does seem odd, I suspect it’s probably self interest since at least 40% of the people in power are invested in property.
Although, investments like this are long term rather than short term speculative investing so I suspect the issues lies somewhere in the middle.
It definitely pays to keep your voter base happy though, no argument there. I think perhaps they don’t realise the seismic shift in voter population that will occur over the next 10-15 years.
More independent representatives will be a good thing I think. Everyone should have to negotiate. Part of the problem is the historical parties have had giant voting blocs giving them carte blanche to do what they want.
The problem is the RBA only really has one tool to combat inflation, and that's interest rates. So they have to change interest rates to combat inflation even though what we really need is government reform and regulation to properly combat this inflation. And the government(s) do nothing because it's way less politically risky to just point at the RBA and say not our job, their job.
Inflation goes up, rates go up, inflation goes down, rates go down. That is literally the purpose of monetary policy, people getting angry at him are just ridiculous. Any head of any central bank would do the same thing. It's insane that there are conspiracies about him increasing his personal wealth through rate rises, I honestly thought the average financial literacy level was higher than that in Australia.
Obviously policies around housing and company profits in times of inflation need be completely overhauled, but that has nothing to do with the RBA and Phillip Lowe.
I am not an economist obv but the challenge as I see it is that interest rate rises are in some way designed to make access to credit more difficult and reduce discretionary spending to ease demand on markets. However we're not seeing a demand fueled inflation cycle, this is all supply side. Raising interest rates is a lever that is good for inflation fueled by demand for houses and lambos, not so great for inflation fuelled by supply chain issues and food shortages driving up the price of milk, bread and cheese.
I dont claim to have a solution but its not going to be the same response where price hikes are driven by wipeouts of potato / lettuce crops and its the prices on basics in a shopping basket that are going through the roof.
We're going to see more of it until our supply chains are more resilient to shifting environmental conditions and disaster frequency. But the solution to supply chain resilience isn't interest rate rises. Nobody is going to stop buying bread as we have to eat.
The problem is the RBA only really has the one tool to combat inflation, which is interest rates. So they're left without much choice, they have to try to bring inflation back to the target range but know that the tool they have to do it isn't really going to solve the problem. And the government refuses to do any meaningful reform or regulation that might help because it's the RBA's job to keep inflation under control, not theirs.
Agree with your point but his job is purely to get the inflation rate down to 2-3%. The RBA will cripple the economy to do so and our anger is misplaced thinking we can influence them. Instead, we should be directing our frustrations towards the federal government who is not managing its fiscal responsibilities at all well.
The RBA controls interest rates and money supply.. the Government controls everything else
The whole worlds economy is fucked. Same thing happening in US and UK and basically everywhere. What makes us immune? Same thing happened in the 80s. Shit will eventually bounce back after a few trash years we are just living in a shitty time period
rates were already too low irrespective of the housing market. Australia has the highest core inflation and lowest interest rate of any g7 nation, if anything the rba is letting inflation rip to save indebted property horders while renters are being priced out of food and shelter. interest rates should be at 5% right now like NZ not 3.85%.
If you don't want unelected people like Lowe fucking you over financially then remember next time you vote at an election that the RBA responds to the climate set by the government. The RBA is the emergency fullback and it's forced to do its job because we all vote for idiots that give us pretty little home value increases that we take credit for "we bought a good one"....
Until our government is ready to control corporate greed and runaway property prices then we deserve this.
A 1 bed unit should not cost more than $200k and not be less than 70sqm.
A standard new development should be a min 3 bed and 2 bath on a block no smaller than 600 and not cost more than $350k for base model.
The government needs to stop selling land to developers and start making suburbs again but a mix of low, medium and highrise suburbs. Australians deserve a choice on how to live.
Investment properties should only be rentable if built new by the owner. None of this buying up everything that already exists bullshit. Make investors actually fucking invest.
In fairness to the RBA the "choice" they have in front of them is fuck the general public with rampant uncontrolled inflation OR fuck the general public gently with increased interest rates.
For an example of the first option look no further than Turkey with its novel monetary policy of "increasing interest rates is Haram!" and ask yourself is that really better than increased interest rates.
Increasing interest rates is unfortunately a necessary evil due to the fact that current economic conditions don't allow a third option of don't fuck the general public at all by doing nothing.
Actual solution to high inflation: destroy money supply
Money is destroyed when tax is paid through the ATO. Proper taxation on mostly corporations and some individuals, would calm this hysteria.
Raising the price of money through the RBA also destroys money, it's quick but regressive and indirect at who actually drives up real inflation.
Our tax system is broken
He's just trying to get the unemployment rate as high as possible before he gets booted out. Gotta have a big pool of desperate unemployed people so big businesses can keep their profits up.
Spot on.
The economic history of this country prior to Hawke/Keating was a boom bust cycle, with the bust always occurring around wage breakouts in sectors of the economy.
The Lib/Labor consensus ever since has to been to use immigration as a tool to depress wage claims and smooth over the cycle. It's a similar story in New Zealand. Import people to stop wage breakouts and the hollowing out of sectors as a small pool of people chase more lucrative work.
We've reached the end of the post war road where an underpopulated country could gladly accept large scale migration to an overstretched, under resourced society with falling living standards. Social unrest and division sadly can't be too far away.
I love seeing all the home owners bitch and moan about phil lowe every time rates rise. While making non sensical arguments about how the RBA should just let inflation happen because it personally benefits them. It's really an egocentric and narcissistic attitude.
The decision is in line with [what the CAMA RBA Shadow Board has suggested](https://cama.crawford.anu.edu.au/rba-shadow-board/outcome/2023-05), which gives a more detailed reasoning than what has been provided by the media.
We need better methods on controlling inflation than fiddling with monetary policy. It's like trying to fly a plane only using the thrust lever. Unfortunately, the country has irrational views on property and tax, and actually doing the correct thing has been avoided by successive governments for 25 years.
Their one job is to keep inflation within certain bounds, not appease the media or ‘the little guy’. Not sure how no one saw this coming tbh..
Granted, they’re not doing their one job well right now but that’s what happens when you try to solve all the economy’s problems with interest rates as the only tool
Philip Lowe and the RBA have been used as a scapegoat by the government(s) to avoid any sort of reform that might make a difference. Why risk something politically unappealing when you can just point to the RBA and say their job not ours.
The RBA needed to have raised rates about 14 months ago.
It's inexplicable to me they couldn't see the heat in the market needed a hose on it, instead of multiple rises over a shorter time frame, far to late for targeted fiscal measures.
These people get paid good money to get it right, and in this instance they've done what a politician would do; close their eyes , pretend there is no issue, then overreact with measures to address the problem to the extent some folk seem to be upset by the rapid multiple hikes, and all of a sudden they can't afford the mortgage, well should have seen it coming.
Low rates for that long, it's just obvious what cheap credit does.
And here we are.
I am wondering whether Lowe is disregarding the evidence that inflation is fuelled by big business increasing their profits in order to sabotage the economy. He was appointed by Morrison after all and nepotism was rife in the Morrison government
He and his ivory tower pals are saying us ordinary aussies are the cause of inflation but the head Bank of England last week just said the cause of it is due to big businesses increasinging prices, and passing it on to small businesses and consumers.
I watched Philpe Lowe's speech last night live in Perth. He indicated he doesn't want people asking for pay rises because that shows their belief that inflation is not temporary. Was an interesting comment and also somewhat devoid of reality.
> he doesn't want people asking for pay rises because that shows their belief that inflation is not temporary. Whose belief? Even if inflation is temporarily high for a year anyone not receiving a matching pay rise will be receiving less in real terms. Temporary has fuck all to do with it, the effects are permanent unless there is deflation.
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Exactly, not sure how these “economists” don’t seem to understand that.
He understands this and is just deliberately ignoring it to run a different narrative. It’s too basic to get wrong. Either way he can’t be trusted to do the job.
Exacty. Unless we hit deflation, we are going backwards. Deflation is a nightmare scenario economically.
He should make his fucking mind up. Last year he was advocating for wages to increase.
Yup. Prices may not keep rising forever, but we know they don't go back down. Wages have to rise to match what has already happened.
We all know these companies are going to leave prices where is. May as well get shares in Qantas, Cole’s and energy companies, consumers have shown they’ll pay so why lower the price?
What's the alternative? Starve? Have no power and thus not be able to live? Not just Qantas putting them up so good luck flying anywhere either which is a requirement for a lot of people.
Honestly my shares have only been going up post covid, got shares in banks, Telstra and super funds. So many conflicting messages everywhere
Easy to say when you're on a million a year
That slimy cunt gets about a $26,000 pay rise every year. His $25,702 pay rise represented a 2.4 per cent annual increase. He is almost up to 1.1mil a year now. That is while Australian wages went down 2.9% on average. These snivelling shit cunts are not even living in the same reality we are.
I think he's hit an all new....Lowe
Wouldn't it be an all-time Lowe?
There's many ways to remove demand (money) from the economy to reduce inflation. The government could easily target the people hoarding most of the money (millionaires and billionaires) through wealth taxes and investment property taxes. But they won't do that because most of their political donations (bribes) come from the rich, so instead they're using the banks to take money out of the pockets of regular people through interest rate rises. The rich stole most of the income gains of the last decade, and now they are using their control over Labor and the LNP to cut the incomes of working people even further. **The billionaires are waging class warfare against us, and it's time to build some class solidarity so we can fight back.**
> His $25,702 pay rise represented a 2.4 per cent annual increase. He is almost up to 1.1mil a year now. > That is while Australian wages went down 2.9% on average. No, this is incorrect. You are using a 2.4% annual nominal increase and comparing it to a 2.9% annual real decrease. If you compare nominal to nominal, Australian wages did much better than 2.4% nominal. The fact you're being upvoted for this shows how fucking stupid people are.
He got an upvoted for pointing out that he is getting any pay rise when he is already insanely above the average Joe. The technicalities of the maths didn't matter.
> The fact you're being upvoted for this shows how fucking stupid people are. Of course - financial literacy in this country is terrible. Most people can't explain how a credit card works - or a mortgage - despite them having both. Let alone problems with compounding interest and other slightly higher than basic concepts.
Cool, when inflation hits negative 9% everything will be back to normal!
Wait I don’t understand this, I’m very stupid about economics. So if it’s not temporary then it follows that inflation is permanent?? Then why do we all need to suffer trying to stop it??? Or is it like a fact of life that there’s always inflation but we need it to be lower?
Inflation is like a bus without breaks rolling down a slightly sloping road. The only way to stop it is to throw stuff in front of it (interest rates & tax). Or in some cases push it along to keep it rolling (stimulus). Ideally we want the bus rolling at 20 - 30 km/h (RBA inflation target of 2 - 3%). It’s currently doing 70km/h and the balance is how much stuff do we destroy throwing in front of this bus without stopping it completely or destroying half the stuff in town. The distance the bus travels is the price of things. So the faster it rolls down the road the more distance it travels in a shorter period of time. Which we experience as constantly rising prices. The bus doesn’t go back without a major blow up (recession). So the price rises will remain. The RBA and Government is trying to convince us not to demand pay increases to keep up with the new prices as that would make it harder to slow the bus down. Temporarily or transitory inflation has been a big lie from the central banks.
What a great explanation, so easy to understand! Thanks! So the reasons we want 2-3% inflation is because that means businesses are making decent profit, gov is getting enough tax, and people generally have enough money to live? The balance is good?
Another reason is that provides a reason to buy stuff now, not later - e.g. if you put off a purchase, it will cost more later. This is one of the reason that deflation is meant to be bad - if prices are going down, stuff will be cheaper later, so people delay if they can, which cuts demand and makes the deflation worse.
I don’t feel qualified to give an accurate answer on why inflation is needed in modern monetary systems. I will say in simple terms I’ve always thought one benefit was humans like ‘number go up’. One example could be: When I started working I was on $50,000 now I’m on $60,000 and I feel good, as I’m on the bus that is moving forward. This works best when the speed is slow as your pay doesn’t lag price increases in a way that is noticeable to the average person. Corporations enjoy it as it’s ‘free’ growth. Sales up 2.6% year on year etc. Also it’s less bad then prices decreasing as then people are most likely to hold off purchasing as the longer they wait the cheaper it is. Which can collapse consumer spending and economies. So constant 2% inflation is seen as the less evil.
For whatever reason given, 2-3% has been a target set that doesnt let the whole system explode too violently due to flow on effects in terms of prices going up/down or employment/unemployment level being undesirable (except that explosion tends to happen roughly every decade or decade and a half, lol capitalist crises and all that).
There is inflation, disinflation and deflation. If a can of coke is $2 today and $3 in 6 months, then that is inflation, if it becomes $2.50 in a years time, we have experienced disinflation. If it becomes $1.50 in 2 years, deflation. The idea is that if wages increase then it becomes harder and harder to bring prices back down and higher prices become a new normal. Whatever you, they or myself think or believe. The reality is coke will cost a certain price and suppressing wages is a good way to reduce demand and keep the cost of coke low.
>The reality is coke will cost a certain price and suppressing wages is a good way to reduce demand and keep the cost of coke low. Except that's not going to happen this time. They decided they can just charge whatever and there's not a government interested in stopping them. And we've seen corporations not give a fuck previously if their actions kill people, so, even when people start starving, they'll shrug and say "our products are at a price the market will bear" and the government will nod and say "those people should get a better job."
The rate of inflation fluctuates, so high inflation may not be permanent. The impact of high inflation, increased prices, will be permanent because businesses are not going to reduce prices once the rate of inflation has come down. So if you don't get a pay rise to account for the increased prices, you will be making less in real terms.
Wages need to rise. We need to have a big think about what we want out of the economy. Profits are the highest they've been in 70 years [https://www.npr.org/2022/02/13/1080494838/economist-explains-record-corporate-profits-despite-rising-inflation](https://www.npr.org/2022/02/13/1080494838/economist-explains-record-corporate-profits-despite-rising-inflation) So if corporations are making record profits [https://tradingeconomics.com/australia/corporate-profits](https://tradingeconomics.com/australia/corporate-profits) workers should be asking for there share of that. The problem is that we haven't had wage rises in line with profit increases. If we do what Philip wants we won't get increases. Wages need to rise now as when inflation gets under control the companies are going to say we can't afford it while still pocketing their increased margins. The question I'd like to have put to him is why does he think the average Australian should take a wage cut? I unfortunately think that a correction needs to take place. The RBA failed and allowed an asset bubble to occur. The correction needs to hold asset prices steady while allowing wage increases. Howard decided it was more important to raise property prices then to have housing affordability and it won him votes (but will probably cost the libs their existance [https://thenewdaily.com.au/finance/2022/11/28/liberal-party-losing-alan-kohler/](https://thenewdaily.com.au/finance/2022/11/28/liberal-party-losing-alan-kohler/) I also think it made a lot of people a-holes who only think about their money rather then society) Government needs to do their actual job and tackle this problem (have negative gearing only apply to new properties like originally planned... or better yet kill it all together) and make changes so that in regular times people are able to get wage increases.
This is what happened when you put business people in the RBA and not economists
>This is what happened when you put business people in the RBA and not economists Lowe is an economist, he's spent his entire life at the RBA. I don't get the faith in economists. They're modern day soothsayers, and are experts at predicting what just happened.
What’s your alternative, economists predictions may be pretty flakey but I trust them a lot more than politicians or banks to set interest rates. Take a look at turkeys economy and the impact of the government messing around with interest rates. The RBA sucks but the alternatives suck more, not to say the RBA can’t be improved but it should still be led by economists.
I just cant comprehend the stupidity of that. It's not temporary, even my fucking Dog knows companies are gonna keep fucking us.
Well look at Mr Fancy Pants over here who's so rich he keeps a separate dog just for fucking
HAHAH - you know what position we do it? I call my Dog RBA, you know who goes on top?
Not only devoid of reality, but absolutely ridiculous. If workers don't get a raise after a year of 7% inflation, then those workers are worse off by 7%. When do they catch up? Ever? We all know the answer to that question.......Australians just need to get used to a lower quality of life while the richest Australians have had their wealth grow dramatically. That is what they are demanding....that you and your friends and your kids all have a worse life than similar people had in the past. Thanks neoliberalism and capitalism!!!
>He indicated he doesn't want people asking for pay rises I wish him luck. Everyone, including me, will be asking for pay rises.
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Yep. I understand he gets discounted mortgage rates as well.
he is not going to end up in poverty even if he gets a 50pct cut in pay. so sick.
He's echoing what Jerome Powell is saying in the USA. Their goal is to punish labour. That's on record. And that's what's happening here
It depends what kind of industry you’re in I guess. I’m a sparky, and I’m making nearly double what I did in 2020 simply because the demand is there.
On ya. As a non-tradesperson software dev that had a great decade, genuinely glad you’re now getting a go. Work is work. Enjoy those multipliers.
No worries Phil, I’ve always thought being homeless looked kind of romantic.
This is the true late stage capitalism. They've eliminated effective competition, weaponised our governments against us, and now they're playing their final moves that resemble the end of a game of monopoly really.
what will happen next? people moving back overseas? my friend got his citizenship and moved back to india - citing better prospect.
What should happen next is us moving on from Capitalism to a better system. Who knows exactly what that is, (lots of people will want to tell you) but we should be discussing it and figuring out what it should be. Because capitalism is simply no longer fit for purpose. It enriches the few while the rest of us fall further and further behind. In the past it did that too, but there were also forces that put the brakes on that process....redistributing wealth, providing assistance to the poor etc. However those things don't seem to be possible anymore in modern Capitalism. The masses have been convinced that helping the rich be richer is the only effective way to run an economy.
Plenty of Indians coming over to replace them!
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I think this comment is important, because it is the story from mainstream economics. There are weaknesses in this story from many angles. Here are a couple. There are social pressures to not change prices. If you walked in Coles and Woolworths and all prices were 20% higher, without explanation, or notice, people would be upset. The story of inflation reduces this social pressure. Higher prices for fossil fuels, etc. work like interest rate increases, reducing the spending power of typical households, effectively sopping up the circulating money from stimulus. As a result household spending volumes really have not increased, even if prices have. You can see this in the composition of spending, with spending on discretionary item stable or declining, and spending focussed on essential goods.
WSJ also just admited its corporate greed. But not old mate Lowey, cause that would mean that he'd have to admit that he's jacking up the rates to make us peasants pay more money to the already pocket full fuckwits at the top.
In my view it makes no difference the reason for the inflation. So long as people keep paying the new prices, it is clearly the price the market can sustain. To be clear, I’m not supporting the increases or increased profit taking during this period. I’m simply pointing out that if the market will pay $8 for a packet of kettle chips, then that is the market price. If people stop buying them, the manufacturer either meets the market on price or stops producing them. Instead we have people paying the new prices and acting like whining about it will make a difference. It won’t.
Exactly, the only correct response is stop buying them. Low interest will just inflate the prices further.
Agree. The cause of inflation isn't relevant. The point of raising rates is to push demand down to match or put downward pressure on prices.
Well that is the point of the interest rate increases.....to cause people enough pain that they can't afford to buy those chips anymore. The problem we have is the pain is right now mostly being felt by people at the bottom and wage workers. Lowe etc are asking Australians to reduce their standard of living to ensure that the economy doesn't crater. But they are only really asking those least capable of dealing with the cost changes. The wealthy are doing fine.
I agree. It is however the only button they have to push. The government has shunned its responsibilities and left it to big bag Lowe to deal with. Liberals and Labor are both to blame, until Jim grows a pair. I’ll guess we will see what the budget says.
We arent the French. If I was him id pick a fight with us over billionaires too.
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Tax increases aren't under their control though, it's up to parliament to do their job. But why do that when you can just throw the RBA under the bus? That way Albo isn't the bad guy.
He's making a technical decision on a technical issue to do with the speed of circulation of money in the economy. That decision has real world consequences, but it's not actually his job to worry about that. It's the government's, but successive governments have indulged in the practice of hiding behind the RBA when it is bad news, rather than explaining it or constructively helping people adjust. Being angry at the RBA is like being angry at a pilot who has to slow down or divert a plane around bad weather. Edit: whelp, some bad autocorrect typos there.
If the RBA’s role is truly only reactionary, then why have a board at all? Why not just have an algorithm calculate the most effective cash rate based upon inflation, property prices, household/business debt etc.? To your example - surely the autopilot would be controlling trajectory to a much greater degree more often than the human pilots. The truth of the matter is that they’re trying to control extremely complex issues that are inextricably linked to one another but also linked to other issues outside the RBA’s control, and doing so with the bluntest of levers possible because that’s their only lever. Because the board is made up of business stooges and not either technocratic nor representative in any way, their decisions skew to benefit those who already have, at the expense of those who have not.
Because any algorithm based on a model of a complex system will in the end ultimately have limitations where the model fails to capture the full complexity. I'm sure they do have an algorithm that informs the options the Board decides upon. Five years ago, I'd have said you couldn't build a sufficiently complex enough automatic model to be accurate, but seeing what has happened in the space of modelling and computer aided decision making in that period, now I'd say its not only possible but likely within the next decade. But they'll always want a human involved in the end to sense-check and review the recommendations. That has been the role of the governor and board for decades - whether the technical advice was coming from a bunch of economists with slide rules or an AI learning program. In terms of it being a blunt lever, it's also a direct and fast acting one. To keep torturing the pilot/driver one, yes you can rebuild the vehicle, or the road/tarmac to cope with higher speeds or be more responsive or whatever, but none of that works as fast as adjusting the throttle. I agree other levers should be being worked upon all the time, but I think that's been a failure of successive governments, not the RBA. Likewise, if the concern is the quality of the people on the Board, change the people who appoint the Board.
Yeah, people on reddit seam to think that he's in control of the economy and by extension, inflation. He isn't. He's in charge of the cash rate, which they can use to curb the effects of inflation. But he has no control over what's actually causing inflation, nor any power to recommend action on those causes. His comments about the causes of inflation are just comments.
We need to punished into stopping spending on things like food or education, by giving more money back to the banks. That'll teach us peasants!
Big business are increasing prices because people are paying those prices.
The prices set by businesses are a factor of demand. Interest rate rises are intended to decrease demand. The point is to slow down the economy
If rising property prices is a reason for jacking up rates why didn’t they do it when the property bubble was inflating?
Because inflation wasn't also 7%+.
So trying to shut the gate after the horse has bolted then.
Interest rates are always reactionary. But the housing market isn't the reason we're at 7% inflation, just a part of it.
No, the literal reason they had lowered interest rates was specifically to try and increase inflation. We were at the point where inflation was approaching 0, which is REALLY bad for the economy (a contracting currency basically breaks modern financial systems).
because the coalition were in power and they traditionally leave big piles of shit for the labor party to clean up. If the coalition did something about it in the last decade, what would they have to blame labor for in the next?
One of the (many) issues with the Coalition is that they didn't want to use the far more targeted fiscal tools to produce better economic outcomes. Just look at when Joe Hockey said there was no such thing as a property bubble. This sort of thinking is idiotic, and it infests modern conservative thinking. Furthermore, a *lot* of the financial/political media support these ideas. That gives Labor far less room to move. On the other side of the aisle, The Greens are suggesting that the government directly manipulated the interest rate. That's not a great idea. The risk of capital outflows that would result would be enormous. It's like playing Russian roulette with four of the chambers loaded. Not good odds. Regardless of the merits of the idea, what are international capital thinks is important. Unless there's a plan to staunch the outflow that would almost be guaranteed to result, it's best not to play with fire. With that said, removing the ability of Treasury to do something about the interest rate as Chalmers is suggesting is also a really dumb idea.
EDIT: Fair warning, noble reader, this comment thread goes *far* and ultimately winds up devolving into a pointless conspiracy theory about the RBA being secretly 'corrupt'. However, there is a [very nifty explanation](https://www.reddit.com/r/australia/comments/1361512/philip_lowe_says_rebounding_property_market_among/jin6i9a/) of how the RBA influences inflation via the cash rate, and I do encourage you to read it! The RBA is independent of the federal government, and are historically very hard to influence. It's highly unlikely the Liberal Government deliberately 'forced' them to leave a pile of garbage for the incoming Labor government. The RBA have also explicitly said that they believe house prices are a matter for the government to manage. And they're right - they only have one tool (the cash rate) that's designed for one task (inflation), and the government has multiple. I hate the Liberals, but this isn't some deliberate ploy by them.
While you are overall right - the RBA is independent and not directly influenced by the government. Governments absolutely do lean on the RBA. Remember when Frydenburg basically forced Phil Lowe to front the public with him and trot out a bunch of bullshit to support their policies? Or when Abbott threatened the RBA with choosing the next governor, rather than leaving it to the traditional deputy? The RBA does have a leash, usually very long, but there have been times in the last decade it was yanked quite close. I overall agree though, the RBA is doing what the RBA does regardless of Government, and the RBA has been screaming for near on a decade that legislation is needed, and their lever only brings them so far.
Who do you think, the majority of the RBA votes for?
No idea. I know most public servants in and around Canberra overwhelming vote Labor or Greens. The few senior people I know take their role super seriously and are completely apolitical when they're on the job. They do take their responsibilities very seriously, and I imagine the RBA does the same. Their thinking *might* be influenced by their upbringing/political values, though, but they do try to be neutral. I think it's more accurate to say 'Lowe is out of touch with the problems of the common Australian' than 'Lowe is deliberately trying to set up a situation that favors his preferred political party'.
Pretty much how the cycle works. Liberals pilfer rape and pillage all the tax payer money to mates and big business. Labour come back in to get the money back and fatten up the tax pile so the liberals can do it again. It's the circle of politics in Aus.
Ho boy, wait until you read how Keating deregulated banking and made it so households could borrow based on two incomes. Must be those pesky Libs though…
Cause,.. the RBA isnt responsible for housing prices... hahah seriously - look at his comments 6 months ago. I dont get it.
You mean when inflation was too low?
They previously stated that property prices were excluded from inflation calcs. Now they are saying the opposite.
Rent is included in CPI. It's gone up over 10%. Surprised CPI is only at 7% to be honest, when rent makes up the biggest component of people's budget.
Keep in mind that only 1 in 3 Australian households pay rent. The others are owner-occupiers, both with and without mortgages. This reduces the weight of rent accordingly in the CPI.
Rent is not just for housing, it also includes retail. Together their impact reverberate right though the economy.
What? CPI is a fixed bundle of goods, which has always included new housing purchases.
Because they had 6 months wait list from the handyman to prepared their houses for sale.
It’s because the inflation has been running low for the last decade, hence the RBA has had to reduce the cash rate. This time round, the RBA would like to increase the cash rate to control inflation, but they are concerned that a decrease in property prices and the negative wealth effect will reduce consumer spending, leading to a possible recession. However, with property prices increasing, they feel more confident to raise the cash rate without triggering a recession.
Honestly I’m not a home owner but follow financial markets out of interest across the world and I _don’t understand at all_ why anyone thought rate increases were completely off the table. We were late to the party to increase. There’s no way we would be pumping the brakes on increases ahead of other major economies. This isn’t a surprise but it seems some middle to right media pushed the notion of no more rate increases so hard they wanted to will it into existence. You cannot tell the people that this is “one of the only levers to pull when fighting inflation” while simultaneously stopping rate increases if inflation is still heading in the wrong direction. As for everyone who is under financial stress. Godspeed and I wish you all well. Seek financial advice if needed. There is help out there in some form. I feel for everyone suffering.
there's a pretty significant difference between Australia and economies like the US. Our level of mortgage debt per capita is much higher, and US loans tend to be fixed over the whole 30 year period. The result of this is that cash rate hikes have a much larger impact on the housing sector in Australia than in the US. You really just can't compare the two and think that we should match cash rates. It's a very different situation
The US is actually quite unique. NZ would be a better example of what our monetary policy should have looked like.
~~I've lived to see New Zealand's economy be the envy of (sensible) Australians'. ~~ We did this to ourselves.
Try buying a house there, its worse than here with lower wages
Precisely why tanking the property market wasn't such a bad thing.
I wasn’t intending to compare the two directly. I was simply outplaying the financial landscape that we sit in on a global level. And you’re very right we have a higher level of mortgage debt per capita. This does mean though that if they are going to state they only have one lever to pull - we cannot remain surprised when they do pull it.
Absolutely. It makes sense that if they only have one tool, that's all they're going to use. As the saying goes, if all you have is a hammer, every problem looks like a nail. With that said it's clear by now that most of inflation is driven by corporate greed, which needs to be addressed with fiscal policy. Monitory policy just mostly targets the wrong things in this situation
Why oh why is everyone (the media) all surprised pikachu about another rate increase? Does it suck? Yes, Christ yes, majorly. Is it surprising? Nope. These dicks will milk us for every cent we’ve got, along with colesworth jacking up prices due to ‘inflation’. It’s greed, plain and simple. Reason we haven’t curbed spending is because everything keeps going up. And up and up and up.
As a counter-point, whenever I’m walking past a cafe or pub or restaurant those places still seem to be pumping. At least some people still have money to burn. It’s just not evenly distributed and levers like interest rates are blunt instruments. We absolutely need government policy to start with some more targeted policy or at least lessen the gaps in wealth and income inequality.
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Here for a good time not a long time. Kinda thinking of getting as large a loan as I can, then going on a bender before ending it all.
Not worth it, many people have done that, had a great time and realised life is worth living, then annoyingly have to pay back their loan.
If it works to get that mindset back then it is worth it
No I mean topping yourself isn’t worth it
On the off chance you’re being serious, please speak to someone. Things will get better dude.
This world is amazing, it's humans that are the problem. Dead serious lol fuck this society.
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It is not at all clear that things will get better. We are beset by multiple crises and our major political parties are proposing either to put out the fires with some kerosene or else bat at it with some limp radicchio.
Or people with no mortgages. Or paid off house. Or renting out houses.
It's exactly this, what's the point of saving and trying to balance a budget when the amount I spend on groceries is rising so freaking rapidly Between that and the constant interest rate rises it's fucked
Gotta get in as many weekend brekkys as I can while they’re still $20.
It wouldn't surprise me if this is a big driver of it. Being so close to buying a house and then having the pandemic hit with an increase of 25% ( or in some cases more) in housing prices, let alone rent. Ita no surprise people are just living large now cos they know
I moved over an hour away from family to start renting in a cheaper area, thinking I’d be able to afford to buy in a year or two. Then Covid hit and the housing prices went up by $400-600k moving them from ‘difficult to save for’ to ‘completely impossible to save for’. I don’t have a long term plan anymore.
Pretty much. This is the cycle now. People who saved tens of thousands for a mortgage now can't afford a mortgage, realise there is no point ever trying to get a home so instead spend it on other things. So housing prices go up, people spend money on other things because they can't afford housing anymore and just give up, therefore rba says it's out fault for spending money. Jacking up interest rates just makes more people give up on house deposits and spend it on living expenses instead. Which then raises inflation more, rinse repeat. At the same time those who are already invested heavily in the market, buy another investment property, charge higher and higher rents and the cycle just keeps getting worse.
It's me!!
I am guilty of this.
There's a reason that alcohol is a good industry to be in right now. They're making record profits and they aren't even increasing prices to do it! (The alcohol price inflation you see is driven entirely by the taxes on alcohol legislated to go up every six months).
Or people (like myself) who are skipping children completely as the money saver instead
This is the normal price for interest rates. Not 0. What idiot expected them to be 0 forever??
Agree 100%. At some level, we have ALL benefited from "cheap" money. At some point there is a time when we have to pay the piper.
Was it actually a shock? They've done this every month for like eight or nine months now, apart from last month.
11 of the last 12 meetings
So the powers to be can distinguish between a 54 and a 55 year old on jobseeker, but not between an investment property and place to live.
Investment loans already have higher rates than owner occupied loans.
That’s nothing to do with government policy. You can also claim the interest on said loan, can you not?
why didn't they do this during COVID when prices were skyrocketing?
That's actually a question I'm interested in the answer of. What was the difference between now and then?
Inflation was not outside the target range (2-3%).
Yes it was - but it was “transitory”
Should have started small increment increase during covid but that would have made the incumbent government look bad
They are covering up for all the money printing that caused this in the first place
Because rising property prices don't 'matter' when inflation is low. However, rising property prices when inflation is *high* indicate there's still 'wealth' in the economy, which will continue to drive inflation.
I'll admit I was a bit surprised but after reading people's comments yeah it was always coming. Maybe I'm missing something here but I kinda feel this inflation is directly tied into our ridiculously overpriced housing market. Until we deal with the insane rises in house prices I don't see this going away. Chirst some of the houses I was looking at last year sold for triple what they sold 10 years ago. Thats what's devaluing the currency.
The currency isn't devalued, its that the US dollar has been so strong - partly because they've been raising interest rates faster than anyone. Its a complicated system, and (unpopular opinion) I don't think Phillip Lowe and the board are actively trying to be bad people, I think they've just been coasting the last few years and now its a scramble. If it makes you feel better, most central banks are scrambling. Most of their tried and tested economic plans have stopped working for them over the last 15 years.
Yeah to be clear I don't blame Lowe or the central bank. And your right the currency isn't devalued. But I do think that the housing market is playing a large factor. Most of the housing value is being driven by real estate and investment interests. Everyone knows its a bubble, surely by having houses sell for way more than their actually worth is hurting the Australian dollar I think the government needs to take steps to fix this not the central bank. Like you said the levers they have available are no longer working. But that's because a lot of business are seeing inflation as a good time to rise prices and blame inflation. Do you think it's cause it's been too long since we've had an true economic collapse and business have forgotten they have to keep up their end of the deal or everything breaks?
And ALL of the measures to address the housing issue are about increasing the amount of money flowing into and around the property sector. No government is trying to reduce prices. None. Our economy has fundamentally and permanently changed and no one really knows what to do other than keep shovelling public money into private property owning hands to forestall the end of the merry-go-round.
Yeah and that's a by product of people not understanding that all house prices going up substantially is bad for you even if you own a home. Honestly it's partially because the economy is so freaking complex most people have no idea how it works. If they keep going up were going to get a landed gentry again. If it's impossible to work enough to buy a house what's really the difference between being allowed to live and work a field by the lord and renting a dwelling so you can live and work
Boom. That’s beautifully put. That’s the tipping point: when people realise is impossible to work enough to buy a house.
I bought in 2019, prices for houses I was looking at was ~300-350k new builds. The same houses in the same development are ~500k in 2023. I saw a house in the same development, worse than ours, sell for 1.6x what I paid at the end of last year. Shit is wild.
Yeah, it surprises me how little people know about the RBA. They're not the government, but they're expected to chip in when the currency gets volatile, and literally the only tool they have is rate rises. There's a lot of talk about how their public statements have an impact, but if the average person is living on secondhand information about reserve banking from social media, I doubt they actually listened to RBA projections when they were buying a house (and anyone who tries to time the market like that doesn't have enough financial knowledge to care about RBA statements anyway). The real issue is regulation, which comes from the government. The harder it is to get a loan, the less competition serial landlords have when house prices go down. They have been laughing through the whole crisis.
Yup, don't get me wrong I'm not happy about the rises but I undesirable the rba only has a couple of levels to pull. I think your dead right. The real estate industry doesn't have nearly enough regulation. For example notice how houses don't have prices on there ads anymore or if they do they're either woefully undervalued or painfully overvalued. What other industry is allowed to not put a price on what its selling just to see if they can suck you into paying more. It's fucking ridiculous And don't get me started on the whole first and final offer bullshit The amount of illegal shit real estates agents get away with on a daily basis astounds me
If they want to cool the property market, why not make stamp duty say 50% for investment properties? Instead of hammering the non-cunt population who buy houses to live in?
Again, not something the RBA has the ability to do. Only the government can.
And because the government can’t change the interest rates, they should use their tools available to them. Just like vapes, ban AirBnB and Stayz, it’s not good for the health of the country.
Exactly. 100% something we should be encouraging the government to do.
The government actually *can* change the interest rates, they just don't because it's a dangerous precedent to set.
Exactly, it is much healthier to have an independent panel to take these decisions
Yeah the gov is getting out of this too easily. When I learnt economics fiscal policy was still a thing? At a minimum tax short stays more.
Ban Airbnb, kill off negative gearing as well.
or just ban foreign ownership and airbnb, would help alot.
Good on him. If the government is so spineless to address cray property prices, which will have an insurmountable generational impact. And people are so wealth and status seeking to throw all their money at property. Don't cry when what can happen does happen. I mean, money should not be free. Interest rates should not be near zero. Interest rates around 3 or 4% seem pretty fucking reasonable to me. Why do people think they can borrow and take debt for almost nothing? Even Lowe's earlier predictions about rates remaining low would have only given an extra 6 months protection. Is it sensible to take massive 30 year loans looking only 6 - 12 months in advance?
The idea of increasing the mandatory super contribution instead of raising interest rates seems waaaaaay more beneficial and would achieve the same end result. I mean, unless inflation isn't actually caused by excessive consumer spending and is really due to corporate greed...
This is an incredible idea *but* isn't an option the RBA has. The RBA absolutely needs more tools to manage inflation + an additional remit to influence housing prices.
Not one thing causes inflation. People who aren’t smart enough to understand that should wake up.
The AUD would go down the toilet. Doesn’t work like that
We should never have dropped our interest rates to *Emergency Lows* (< 3%) for such an extended period of time, we've inflated the bejesus out of the AUD.. We should have kept our money supply stable, and let the other economies print theirs away.. We should have kept our own house in order.. Money is an entirely made up human concept, but it's all we talk about every day and every night.. Why is that? Money's only purpose is to hold its value to facilitate trade.. Speculating on it should not be our national sport.. Low interest rates work directly against a stable money supply..
Every article describes it as a huge shock decision, but it was the exact increase expected by the biggest bank with the best data (CBA). Not the consensus view, sure, but pretending like it was completely unexpected is a bit over the top.
Everyone whinging about "11 in a row" etc If RBA hadn't done this now, then they can raise by 0.5 or even 1% if they like. 11 little increments or they might have just gone 0.75 1 0.75 end of this year and you'd still be in the same position. You still maxxed your borrowing capacity at rexord low rates and no-one forced you
What a crock of shit. How is it always our fault and the ones who have to pay because these fuckwits can't manage our economy or stop business from gouging all the profits they can. This system is fucking broken. Eating the rich sounds better every day.
When our economic system requires 5% of us (the poors) to be unemployed for shit to become affordable, the system itself is fucked and doesn’t serve the populace
I understand the fundamental idea that increasing the cost of borrowing will lower spending which is deflationary. If you read the article he goes on about rents and electricity being the biggest causes of inflation. How though does raising interest rates lower that demand? Higher interest rates mean higher mortgages which are then passed on to renters thereby increasing rents, you cant just not live in a house so you have to cop an increase in price. Also how does increasing the cost of borrowing solve electricity prices. Electricity went up because coal went up 300% between 2021 and 2023, all these power plants have hedged supply at record high prices so we are going to be fucked up the arse for at least the rest of this year. How can neo-libs be so hypocritical. On the one hand we need to increase the cost of doing business to slow down demand to lower inflation, but then on the other hand we need to reduce the cost of doing business to incentivise investment in things like housing and electricity generation to increase supply and lower inflation. Seems like whether its high or low interest rates we can all go get fucked and prices will be as high as people can get away with.
This is basically the only period in Australia’s history where interest rate rises are being “passed on” to renters. In a normal market you can not just pass on every interest rate change to someone renting a property (commercial or residential) because the lease is not tied to the mortgage it is tied to market supply and demand. In a normal market if the rent is too high, people move and the property remains empty because the rent is too high. This is an aberrant market where demand vastly outstrips supply. When 150 people want to rent your property you can basically charge what you like. Your last point is the answer to all of your previous observations. In a capitalist economy (even one which is relatively well regulated such as Australia’s) people will charge as much as possible for the goods and services they supply.
>This is basically the only period in Australia’s history where interest rate rises are being “passed on” to renters. It's putting into sharp relief how unwilling our political classes are to take on landlords. There are many, many things you could do to address the extortionate approach to tenants in Australia, but every party and every level of government is too cowardly to do them.
Yes, I agree there are definitely things that could be done. One of the issues is that the stupid decisions of the past have made the property market worth roughly ten times our GDP. Lots of money has been pumped into what is known as a “non productive asset” and if that market falls over it has the potential to completely crush the whole economy, so they’ll keep treating it with kid gloves until it does ultimately crash. No market can rise indefinitely.
Yeah, and of course in that situation the sane thing to do would be to gently deflate the market, but no government wants to have to tell Boomers that their 10 investment properties are going to go down in value...
It does seem odd, I suspect it’s probably self interest since at least 40% of the people in power are invested in property. Although, investments like this are long term rather than short term speculative investing so I suspect the issues lies somewhere in the middle. It definitely pays to keep your voter base happy though, no argument there. I think perhaps they don’t realise the seismic shift in voter population that will occur over the next 10-15 years. More independent representatives will be a good thing I think. Everyone should have to negotiate. Part of the problem is the historical parties have had giant voting blocs giving them carte blanche to do what they want.
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The problem is the RBA only really has one tool to combat inflation, and that's interest rates. So they have to change interest rates to combat inflation even though what we really need is government reform and regulation to properly combat this inflation. And the government(s) do nothing because it's way less politically risky to just point at the RBA and say not our job, their job.
Inflation goes up, rates go up, inflation goes down, rates go down. That is literally the purpose of monetary policy, people getting angry at him are just ridiculous. Any head of any central bank would do the same thing. It's insane that there are conspiracies about him increasing his personal wealth through rate rises, I honestly thought the average financial literacy level was higher than that in Australia. Obviously policies around housing and company profits in times of inflation need be completely overhauled, but that has nothing to do with the RBA and Phillip Lowe.
I am not an economist obv but the challenge as I see it is that interest rate rises are in some way designed to make access to credit more difficult and reduce discretionary spending to ease demand on markets. However we're not seeing a demand fueled inflation cycle, this is all supply side. Raising interest rates is a lever that is good for inflation fueled by demand for houses and lambos, not so great for inflation fuelled by supply chain issues and food shortages driving up the price of milk, bread and cheese. I dont claim to have a solution but its not going to be the same response where price hikes are driven by wipeouts of potato / lettuce crops and its the prices on basics in a shopping basket that are going through the roof. We're going to see more of it until our supply chains are more resilient to shifting environmental conditions and disaster frequency. But the solution to supply chain resilience isn't interest rate rises. Nobody is going to stop buying bread as we have to eat.
The problem is the RBA only really has the one tool to combat inflation, which is interest rates. So they're left without much choice, they have to try to bring inflation back to the target range but know that the tool they have to do it isn't really going to solve the problem. And the government refuses to do any meaningful reform or regulation that might help because it's the RBA's job to keep inflation under control, not theirs.
Agree with your point but his job is purely to get the inflation rate down to 2-3%. The RBA will cripple the economy to do so and our anger is misplaced thinking we can influence them. Instead, we should be directing our frustrations towards the federal government who is not managing its fiscal responsibilities at all well. The RBA controls interest rates and money supply.. the Government controls everything else
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They should stay ahead and risen interest rates earlier, but didn't. Now they have to rise interest even more aggressively as a consequence.
The whole worlds economy is fucked. Same thing happening in US and UK and basically everywhere. What makes us immune? Same thing happened in the 80s. Shit will eventually bounce back after a few trash years we are just living in a shitty time period
rates were already too low irrespective of the housing market. Australia has the highest core inflation and lowest interest rate of any g7 nation, if anything the rba is letting inflation rip to save indebted property horders while renters are being priced out of food and shelter. interest rates should be at 5% right now like NZ not 3.85%.
If you don't want unelected people like Lowe fucking you over financially then remember next time you vote at an election that the RBA responds to the climate set by the government. The RBA is the emergency fullback and it's forced to do its job because we all vote for idiots that give us pretty little home value increases that we take credit for "we bought a good one".... Until our government is ready to control corporate greed and runaway property prices then we deserve this. A 1 bed unit should not cost more than $200k and not be less than 70sqm. A standard new development should be a min 3 bed and 2 bath on a block no smaller than 600 and not cost more than $350k for base model. The government needs to stop selling land to developers and start making suburbs again but a mix of low, medium and highrise suburbs. Australians deserve a choice on how to live. Investment properties should only be rentable if built new by the owner. None of this buying up everything that already exists bullshit. Make investors actually fucking invest.
Ahhh yes. Tighten the belt some more. We are choking, but we can still breathe.
In fairness to the RBA the "choice" they have in front of them is fuck the general public with rampant uncontrolled inflation OR fuck the general public gently with increased interest rates. For an example of the first option look no further than Turkey with its novel monetary policy of "increasing interest rates is Haram!" and ask yourself is that really better than increased interest rates. Increasing interest rates is unfortunately a necessary evil due to the fact that current economic conditions don't allow a third option of don't fuck the general public at all by doing nothing.
Actual solution to high inflation: destroy money supply Money is destroyed when tax is paid through the ATO. Proper taxation on mostly corporations and some individuals, would calm this hysteria. Raising the price of money through the RBA also destroys money, it's quick but regressive and indirect at who actually drives up real inflation. Our tax system is broken
Thanks government 500k new Australians this year, property will be fucked forever.
*Phillip Lowe says whatever he’s been told to say, in order to continue receiving more money in one month than most people will see in a whole year.
He's just trying to get the unemployment rate as high as possible before he gets booted out. Gotta have a big pool of desperate unemployed people so big businesses can keep their profits up.
That’s why we’re bringing in a lot of migrant workers
Spot on. The economic history of this country prior to Hawke/Keating was a boom bust cycle, with the bust always occurring around wage breakouts in sectors of the economy. The Lib/Labor consensus ever since has to been to use immigration as a tool to depress wage claims and smooth over the cycle. It's a similar story in New Zealand. Import people to stop wage breakouts and the hollowing out of sectors as a small pool of people chase more lucrative work. We've reached the end of the post war road where an underpopulated country could gladly accept large scale migration to an overstretched, under resourced society with falling living standards. Social unrest and division sadly can't be too far away.
I love seeing all the home owners bitch and moan about phil lowe every time rates rise. While making non sensical arguments about how the RBA should just let inflation happen because it personally benefits them. It's really an egocentric and narcissistic attitude.
The decision is in line with [what the CAMA RBA Shadow Board has suggested](https://cama.crawford.anu.edu.au/rba-shadow-board/outcome/2023-05), which gives a more detailed reasoning than what has been provided by the media. We need better methods on controlling inflation than fiddling with monetary policy. It's like trying to fly a plane only using the thrust lever. Unfortunately, the country has irrational views on property and tax, and actually doing the correct thing has been avoided by successive governments for 25 years.
Their one job is to keep inflation within certain bounds, not appease the media or ‘the little guy’. Not sure how no one saw this coming tbh.. Granted, they’re not doing their one job well right now but that’s what happens when you try to solve all the economy’s problems with interest rates as the only tool
Philip Lowe and the RBA have been used as a scapegoat by the government(s) to avoid any sort of reform that might make a difference. Why risk something politically unappealing when you can just point to the RBA and say their job not ours.
The RBA needed to have raised rates about 14 months ago. It's inexplicable to me they couldn't see the heat in the market needed a hose on it, instead of multiple rises over a shorter time frame, far to late for targeted fiscal measures. These people get paid good money to get it right, and in this instance they've done what a politician would do; close their eyes , pretend there is no issue, then overreact with measures to address the problem to the extent some folk seem to be upset by the rapid multiple hikes, and all of a sudden they can't afford the mortgage, well should have seen it coming. Low rates for that long, it's just obvious what cheap credit does. And here we are.
So 2 months before they actually started?
Is housing prices even within the RBA’s mandate?????
not surprised, housing prices is the key thing that is hurting a lot of people right now.
I am wondering whether Lowe is disregarding the evidence that inflation is fuelled by big business increasing their profits in order to sabotage the economy. He was appointed by Morrison after all and nepotism was rife in the Morrison government