‘Line-ball decision’ on Melbourne Cup rate hike as inflation races ahead | rachelclun
last Tuesday, emphasising what it labelled “responsible” spending measures aimed at minimising any effect on inflation as the local and global economic outlook worsens.. The Reserve Bank had forecast inflation will peak at 7.75 per cent in December., only 28 per cent of voters thought the budget was good for their households, down from 40 per cent after the March budget, and 44 per cent believed the budget was good for the country, down from 50 per cent in March.
Dr Brendan Rynne, KPMG chief economist, said the Reserve Bank faced a trade-off between slowing the economy down more rapidly by raising rates by half a percentage point and potentially losing credibility after signalling it was moderating rate rises from the rapid run so far this year. “Every single data point points to the economy being much, much weaker in 2023. So they will be cautious about not pushing interest rates up too high,” she said. “Obviously, the intention is to make things tougher for people, so they stopped spending, but there’s a fine balance to achieve.”Rynne and Thompson both pointed out there was a lag effect on rate rises and when they are felt.
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