Interest rates are likely to rise this afternoon. But do you understand why? Here's everything you need to know.
"One is we've had a lot of COVID disruptions," explains economist Nicki Hutley."On top of that, the war in Ukraine has sent energy prices soaring. In Australia, we've also had flooding, which impacts agricultural prices."
Reserve Bank Governor Philip Lowe says inflation could reach up to 7 per cent by the end of the year.What does the Reserve Bank consider when it makes decisions?It considers all sorts of factors like inflation, unemployment, wages growth, pubic and private sector spending."Using interest rates is a bit like steering the Titanic," said Ms Hutley.
"It's slow and takes a lot of effort to be precise. There's a risk you go too hard and too fast and hit the iceberg. And the iceberg is a recession," she said.
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