Particle.news
Get it on Google Play
Download on the App Store
11 ARTICLES
·
2h ago

RBA Warns Eroding Public Trust Will Raise Cost of Cutting Inflation

The deputy governor said weakening confidence could force larger rate rises and greater pain for households as the bank watches how recent tightening feeds through to prices and jobs.

Pedestrians walk past the Reserve Bank of Australia building in central Sydney, Australia, February 10, 2017. REUTERS/Steven Saphore
RBA deputy governor warns of short-term pain for long-term gain. NewsWire / Max Mason-Hubers
The RBA is more trusted than the Federal Government according to its survey.
The RBA is more trusted than the Federal Government according to its survey.

Overview

  • The Monetary Policy Board raised the cash rate to 4.85% on Tuesday in its fifth hike this year, with three members dissenting from the decision.
  • Deputy Governor Andrew Hauser told a Canberra audience that RBA research shows overall trust is moderate but trust in the bank’s near‑term ability to hit its goals has fallen materially.
  • Hauser warned that when people doubt the bank’s strategy the RBA must lift rates more aggressively, which raises the economic cost of bringing inflation down.
  • Governor Michele Bullock has said higher rates will hit households hard and may feel like a recession for many as incomes and spending struggle to keep pace with costs.
  • RBA staff project inflation will remain above the 2–3% target into 2027 and expect slower growth and higher unemployment, a risk the bank links to global shocks and rising public anger over cumulative price rises since COVID.