RBA Signals Further Rate Hikes if Needed as 4% Inflation Meets New Oil Shock
Updated
Updated · ABC News · Jul 28
RBA Signals Further Rate Hikes if Needed as 4% Inflation Meets New Oil Shock
3 articles · Updated · ABC News · Jul 28
Summary
Michele Bullock said the RBA is ready to raise the cash rate again if inflation accelerates, with the board due to meet in a fortnight.
4% headline inflation in May and the latest oil-price spike have added to inflation pressure, Bullock said, even though fuel-price effects have so far been smaller than first feared.
Weak productivity growth is the bigger structural problem, she said, because it limits how fast the economy can grow without reigniting inflation and keeps real wage gains subdued.
Australia is more resilient than in the 1970s because of credible inflation targeting and lower oil dependence, but Bullock said supply shocks can still curb growth and lift prices.
The labour market and housing have softened more than expected, yet Bullock said further easing in jobs conditions will likely be needed; unemployment is 4.4% and forecast at 4.6% by end-2027.
Can the RBA truly tame inflation without triggering a severe recession when relentless global supply shocks and falling productivity cripple the economy?
If data center investments are masking a per capita recession, what happens to Australia's economy when this tech spending boom inevitably cools?