We are all living in uncertain times, so we expect decisions to be made with a high degree of caution. That applies to the central bank and interest rates
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The Reserve Bank’s decision to raise interest rates on Tuesday came as little surprise to many in financial markets. But a split decision by the central bank’s monetary policy board – with five in favour of hiking and four wanting to stay on hold – shows very clearly why this outcome was never a done deal.
Many rate hawks were focused on a recent podcast with the RBA’s deputy governor, Andrew Hauser, where he said that “we have a problem with inflation. It’s too high.” But he also said in the same podcast that the “path of interest rates is [to deal with inflation] … is less certain”, especially given the global backdrop. That comment seems to have been largely ignored.