ANALYSIS: The Reserve Bank is playing a game of chicken with inflation. But how far is it prepared to go?
Former Treasury economist Warren Hogan, for example, says the effect of the already announced interest rate increases on inflation could not be counted "in any measurable way".
Before then, he says, "housing and investment goes first" in the weeks and months following the onset of an interest rate tightening cycle. It creates an impression, however false, that higher interest rates are not doing the job of reducing inflation. "After initially being predominantly driven by supply shocks, inflation is now spreading to more persistent non-discretionary items.""The Australian economy is growing solidly," the Reserve Bank said. "The earlier rapid bounce-back in spending from pandemic-related restrictions is largely complete, and growth in consumer spending remained solid into the September quarter.
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