The RBA increases rates again

 

Please click here to view Shane Oliver's views on the RBA's recent increase in interest rates.

Key points raised are :

  • The RBA hiked its cash rate for the second time this year by another 0.25% to 4.1% in response to inflation running above target and the War with Iran likely to boost it further.

  • A further rate hike is highly possible, but the longer the conflict persists the greater the risk that the inflation shock will turn into an output shock.

  • As such our base case is for the RBA to leave rates on hold at its May meeting. 

  • The best thing the Government can do to help alleviate underlying inflation pressures is to lower the level of public spending and introduce reforms to help boost productivity.