Carrington Clarke

He described this as the central banker's nightmare, where you have a situation where you've got a supply shock.

And what we have at the moment is an oil supply shock, which means you're getting upwards pressure on inflation, but you're also downgrading GDP growth at the same time.

And so, unfortunately, that means if you're trying to deal with inflation by bringing down demand domestically, which is what they're trying to do by hiking interest rates,

you're also making it harder for growth to be positive.

Yeah, it's a very difficult path to try to walk, but it is important to note that the Reserve Bank is not doing this because it enjoys inflicting play.

These are not sadists.

This is a group of people who are trying to figure out how

how to set the interest rates of Australia in order to both keep prices growing at a relatively low and stable rate, but also to not have mass unemployment and see the country

careening into recession.

It's just very hard to do that right now.

Let's work through some of the numbers because this is, I think, perhaps part of the reason why this result was more clear cut is that the Reserve Bank had at this meeting, which they didn't have at the March meeting,

updated forecasts, laying out for them exactly where the Reserve Bank thinks the economy could be going.

And we should point out, one of the features of this statement of monetary policy is they take as given the market expectation of where interest rates are going to go.

Now, at the moment, the market believes that there will be 60 basis points of rate hikes this year.

So that is basically two and a bit.

We've just had one of them.

So that's the assumption.

And all these numbers are based on those assumptions.

So that might be partly guiding why the members of the board decided to hike because it's keeping in line with market expectations.

Which might surprise people given that we've had a prolonged period of heightened prices for oil because of the war in the Middle East.