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RBA is lost in the frightening territory of full employment (www.rossgittins.com)

submitted 1 year ago by Joshi@aussie.zone to c/australianpolitics@aussie.zone

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The Reserve Bank’s behaviour last week can only be described as bizarre. It’s a sign that it’s lost its bearings and isn’t sure what’s happening in the economy or where it’s headed. What has caused its befuddlement? Our unexpected return to near full employment.

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[–] dgriffith@aussie.zone 0 points 1 year ago

Everything else is rarely equal though. As can be evidenced by decades of >5% rates.

Currently interest rates affect QOL so much because everyone is mortgaged up to their eyeballs. That isn't normal but unfortunately the policies that have promoted that are beyond the RBAs scope.

So yes , lower interest rates help QOL but they also promote inflation and that's a much harder beast to reign in once it gets up and rolling - for example, we're never going to get back the cumulative 25% increase in the cost of living we've been hit with in the last 4 years or so.

And calling the RBAs response "bizarre" - when we are in a period where caution might be a good idea due to contradictory economic indicators - just seems a bit hyperbolic.