Mastodawn

Speculation and the old skeleton-in-the-cupboard the debunked employment-inflation nexus are two of the perennial reasons for RBA intervention. Both of these are features of the neoliberal economic system we all live under. Greg Jericho explains in his latest article in the Guardian why the RBA ought to wait before jumping on the cash rate lever.

“There is a kind of sickness in Australia’s coverage and discussion about the economy – an obsession that interest rates need to do something. Go up, go down – anything! Unemployment fell, interest rates must do something (apparently fewer people being out of a job is bad and needs to be cured). Oh no, inflation went up in one month – we need interest rates to do something!!

We see this as well with investors – or let’s be honest, speculators – who are determined that interest rates will go up next week.

Even before the December CPI figures were released, investors were betting (and that is all it is) that there was a 58% chance the Reserve Bank of Australia would increase rates on 3 February:”

#Finance #CashRates #InflationRate #CPI #AusPol #RBA #GregJericho

The easy thing for the RBA to do next week is raise interest rates. The smart move is to wait

Oh no, inflation went up in one month – we need rates to do something! But first, let’s take a closer look at those figures

The Guardian