Carrington Clarke

Does this challenge that basic assumption, do you think?

Now, these were very particular times, weren't they?

This was a time when the labour market was very tight.

It was COVID.

Everything was a little bit unusual.

Yeah, it is fascinating and it is worthy of discussion because obviously pushing up interest rates comes with a big cost.

Yeah.

You could feel that from the Reserve Bank Governor Michelle Bullock.

She was very aware at that press conference about the view of many Australians, which was that a hike at this particular time comes across as cruel when people are already suffering with higher inflation.

But they're doing it because this is what we believe works.

If there's anything that changes our understanding of exactly that transmission of higher rates or lower rates and what it does to the economy, those are things that the Reserve Bank will have to take into account when they're making their decisions in the future.

As they keep saying, they've got one blunt instrument and they do these hikes because they think it helps to bring down inflationary pressure.

But these type of real world examples of what's actually occurred

you would think would help to inform them going forward.

Although it does seem to make the, dare I say, it makes the view even more muddy at this point about exactly how it's working on the economy.

Yeah, fascinating.

That is it for today's episode of ABC Business Daily.

We'll be back in your feeds tomorrow, but just a little later than usual, I will be teaming up with the brilliant Patricia Carvellis to bring you a special breaking budget episode of the pod right after it's unveiled here in Canberra.

We'll dig in, we'll digest.

the economic and political consequences of what the government has in store for the country over the next financial year.