The bank must be seen to be independent of government and make good monetary policy decisions if it is to convince the public it will get inflation under control.
The “traditionalist view” that central banks probably need to inflict a recession to return high inflation to target is coming under question.
“Indeed, there is what I will call a ‘traditionalist view’ that says the substantial resource slack generated by a deep recession is necessary to reduce strong inflationary pressures – and that delaying taking this bitter medicine risks unhinging inflation expectations, making the job even more difficult.
But Goolsbee says this cannot be taken for granted. “Of course, this anchoring didn’t come out of thin air; it hinges on a belief in the inflation-fighting credibility of the Fed. One subtlety is that Treasury forecasts headline inflation, whereas the RBA focuses more on underlying inflation known as the trimmed mean, which strips out volatile prices such as for petrol.Underlying inflation of 1.2 per cent for the September quarter was notably above the RBA’s implied forecast of 0.9 per cent, due toEconomists and traders in money markets and are betting inflation will force the RBA board to raise the 4.1 per cent cash rate.
United Kingdom Latest News, United Kingdom Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
UBS Expects Reserve Bank of Australia to Keep Interest Rates Higher for LongerUBS predicts that the Reserve Bank of Australia will maintain higher interest rates for an extended period and delays its forecast of the first-rate cut to November 2024. The broker anticipates a quarter of a percentage point increase at the RBA's November 7 meeting, with a potential risk of another increase in February 2024.
Read more »
Market Analysts Predict Interest Rate Hike by Reserve Bank of AustraliaMarket analysts are predicting that the Reserve Bank of Australia will raise interest rates at its next meeting on November 7. While some experts believe the cash rate will peak at 4.6 percent, others argue that further rate hikes will be necessary to bring down stubborn inflation.
Read more »
Strong Retail Sales and Unrelated Events Push Reserve Bank to Raise Interest RatesThe value of retail sales in Australia increased by 0.9% in September, driven by purchases through department stores and the release of the new iPhone 15. Other factors contributing to the increase were the start of Queensland's energy rebate program and the federal government's cheap medicines policy. The good gardening weather also led to higher sales of clothing and gardening equipment.
Read more »
Strong Retail Sales and Unrelated Events Push Reserve Bank to Raise Interest RatesThe value of retail sales in Australia increased by 0.9% in September, driven by purchases through department stores and the release of the new iPhone 15. Other factors contributing to the increase were the start of Queensland's energy rebate program and the federal government's cheap medicines policy. The good gardening weather also led to higher sales of clothing and gardening equipment.
Read more »
IMF Urges Reserve Bank to Lift Interest Rates to Control InflationThe International Monetary Fund has urged the Reserve Bank to lift official interest rates further while warning they may have to go even higher if the nation’s governments don’t abandon or delay some of their multibillion-dollar infrastructure projects.
Read more »
Commonwealth Bank's Mortgage Bank Shrinks for Third Consecutive MonthCommonwealth Bank, Australia's largest lender, has experienced a significant decline in its mortgage bank for the third month in a row. The decline is particularly noticeable in home loans, putting pressure on the bank's CEO to address the issue. The bank's lending to owner-occupiers and housing investors has decreased, and analysts expect the bank to reduce pricing in order to regain momentum.
Read more »