Senior Economist at The Australia Institute, Matt Grudnoff, says the RBA Monetary Policy Board’s decision to lift the official cash rate from 3.85% to 4.10% is a case of “all pain, no gain” for Australians.
He says while skyrocketing fuel prices will push up inflation, they are the result of a supply shock caused by the war in the Middle East. The RBA has previously stated it should not respond to a supply shock by lifting rates.
“The Reserve Bank Monetary Policy Board has made the wrong decision to increase interest rates today,” said Matt Grudnoff, Senior Economist at The Australia Institute.
“Inflation caused by a supply shock cannot be brought down by increasing interest rates. How can increasing Australian interest rates open the Strait of Hormuz?
“The increase in fuel prices is already acting to reduce demand in the Australian economy. Higher petrol and diesel prices mean people have less to spend on other things, and as these fuels are largely imported, all the extra revenue is flowing overseas.
“All this increase in interest rates will do is heap more misery on Australian mortgage holders who are already being hurt by higher fuel prices.
“The RBA needs to be honest with the Australian people that nothing it can do will reduce inflation caused by a world oil price shock.
“At a time of great economic uncertainty, now is not the time for the RBA to be tapping the breaks, trying to slow the economy down.”







