Wednesday, June 8, 2022

Bill Mitchell — RBA aims to cut policy stimulation by adding to it

It’s Wednesday, and we have some analysis and news and then my music segment for the week. Yesterday, the Reserve Bank of Australia (RBA) stunned the nation by pushing up interest rates by 0.5 points, claiming it was the responsible thing to do given that inflation was higher than expected. They then outlined all the factors driving inflation – none of which are going to be responsive to interest rate rises. Further, when one dissects the way in which interest rate rises work through distributional effects and effects on business costs, it is not clear that increasing rates will not just add to the stimulation rather than reduce it as the RBA claims. Next, we Fact Check the Fact Checkers and after all of that we have some Tupelo Blues, to restore some sense of decorum.
Bill Mitchell – billy blog
RBA aims to cut policy stimulation by adding to it
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

1 comment:

Footsoldier said...

Philip Lowe is doing what insiders like to call a " Mario Draghi"

Trying to trick the world’s portfolio managers into acting on their beliefs that were installed in them at University.

Which won't have the desired effect it used to have if portfolio managers have been learning MMT.

What's more controversial is some would say Lowe is also sending a signal to his geopolitical enemies and saying look this is how you fight inflation.

Yeah sure, we are only raising by 0.25% and maybe 2% overall. However you, our geopolitical enemy, we would like you to raise by by 20-25%.