Economists say Australia’s central bank can only do so much to counter cost of living problems, which are largely driven by global price growth in essentials including oil and food. auspol costofliving
KPMG senior economist Dr Sarah Hunter said the whole world was experiencing supply shocks not seen since the 1970s, with higher costs for essentials including fuel and groceries due to some lingering effects of the pandemic in China but also the war in Ukraine.
“The RBA can’t really look through that shock the way they perhaps might normally, because it’s there and it’s not going anywhere.” Independent economist Chris Richardson said Australia’s cost of living problem is supply driven and could not necessarily be fixed by the RBA.“If you raise interest rates in Australia, you don’t cause peace to break out in Eastern Europe,” he said.
But despite the global supply pressures beyond the RBA’s control, CommSec chief economist Craig James said a modest lift in interest rates could have a big impact in slowing the Australian economy.
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