this post was submitted on 18 Feb 2025
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I really don't understand this move from the RBA. We've just got inflation "under control" and their first thing is to then lower interest rates which will increase inflation?
There's no link between the rates and inflation, inflation was caused by higher energy prices which pushed the cost of transport up. Other countries have been cutting rates for months and their inflation numbers are similar.
You better tell the reserve bank and most economists that rates don’t impact inflation, it would be some rather ground breaking news.
https://www.newsclick.in/There-Whole-Ideological-Package-That-Goes-Raising-Interest-Rates-Fadhel-Kaboub
TL:dr : it's because of fiscal policies, energy and mono/oligopolies. The fix is not to raise interest rates and push a bunch of people into unemployment and out of their houses, it's tackling the various monopolies in the Australian economy, and reducing dependence on gas and oil. And taxing the rich.
Ok you just gave yourself away lol.
The "rich" pay the overwhelmingly large majority of all the taxes in the country.
Oh, how dare I complain about the widening inequality in this country! Please let's just go down the same road as the US so we can have Clive Palmer hire a bunch of college kids to cut costs everywhere.
In the USA, the founding fathers who wrote the constitution and founded the country were a bunch of college aged kids. That argument doesn't work. They're also not the ones cutting costs, they're getting all the data and reporting it so Trump and his advisors can decide what to cut.
Widening inequality by itself isn't just a bad thing that needs fixing. Rich people have more money to get more rich. That's just how money works.
That's how capitalism works without government intervention, until the wealthy are so wealthy they buy all assets and our politicians, yes. Eventually capitalism will eat democracy if you let it.
"Eventually". Cool.
Is there a better system than capitalism? Nope.
You can have the Scandinavian model where the worst externalities are counteracted by government (with high taxes, no privatisation of important public services, etc).
So why did they jack up the rates quickly and massively to literally try and curb inflation? lol You have no idea whta you're talking about. Inflation is caused by people having and spending more money. Lowering interest rates means lower repayments which means more money in peoples hands for them to spend, pushing inflation up. Higher interest rates mean the opposite, which pushes downward pressure on inflation.
They did it because everyone else did the same and they wanted to look like they were doing something. Jacking up rates only works when the thing going up is discretionary spending instead of essentials.
Which it was.
The things going up were food, energy and housing. Those are all inelastic goods.
Definitely not the only things that were going up.