You say lettuce, I say supply constraint

[mmm....shiney!]

The RBA has played the only card it has in the deck in an attempt to curb inflation. The trouble is supply and demand seated across from Bullock at the card table know what's in her hand and that when she's lays it down it's going to be a loser anyway. But it's the only way she knows how to play "Inflation". Raise rates in order to raise the AUD making imports cheaper, curb mortgage holder's spending habits through increased repayments, lower business profits and investment as a result of declining consumer spending.

The trouble is it's all nice in theory, but it doesn't work.

When lettuce sored to $6 each post-COVID, it wasn't rising interest rates that brought them back down to $2. It was supply.

The correct approach is:

Supply constraint = inflation, therefore either increase supply to reduce inflation or reduce prices to reduce inflation.

Bullock's approach just makes stuff more expensive, except maybe mass-produced shit from Temu or PMs/crypto on the margins occasionally (ignoring the fundamentals that determine price).

As Bill Mitchell puts it:

Interest rate hikes will not get ships moving through the Strait of Hormuz more quickly​

The Federal government needs to take fiscal action to reduce inflation and they can start with the tax system:

Reduce the fuel excise tax

 

[bubblebobble2]

Make AUS great again!

 

[leo25]

Don't worry the government will print more money and create more fake high paying government jobs to ease inflation pressure.

Albo also announced they will be printing more fuel to ease the potential fuel shortage.

 

[Shaddam IV]

All 4 banks raised their lending rate, I bet when I check my savings account that my savings interest rate hasn't increased.

 

[leo25]

Since our banks no longer need our deposits/data entry, there is no longer any incentive for them to incentivise us with higher rates.

Just a big circle jerk for the big 4.

 

[mmm....shiney!]

All 4 banks raised their lending rate, I bet when I check my savings account that my savings interest rate hasn't increased.

The savings rate doesn't interest me so I never check it.

However, when the RBA raised rates in February my bank sent me an email saying the new mortgage rates wouldn't come into effect until April, which is a 2 month lag. Which is critical because rate changes by nature have a lagging effect on the economy anyway, a lag that would probably take months to filter into the inflation data regardless of whether the banks changed their rates immediately or not.

I'm assuming that I'll get another email in the next week or so informing me that the next rate rise on my mortgage won't come into effect until May.

Any impact Bullock is hoping that rate rises have on inflation are months away from taking any effect if they actually take any real effect. In the meantime the war in the Middle-East may be over for now or our Federal government will lower fuel excises or do nothing citing some fallacious economic principle or three in their defence.