Sally Tindall

It was clear they needed to get that cash rate up to get people to stop spending to bring the inflation down.

Now that we're at the kind of pointy end of business, or we were before the conflict in the Middle East, the decisions are getting a lot more difficult for the RBA.

And it had resulted in a couple of U-turns from the RBA, right?

Because they had cut the cash rate last year three times and then reverted back to rate hikes because of the toothpaste in the tube, which I'm going to use that reference from here on in.

It's fantastic.

But this conflict in Iran has made it even more problematic because

It's the obvious choice for the RBA who really has one primary lever.

It's the cash rate.

They can go up, they can go down, but that's broadly their primary tool.

The decision from the RBA to hike the cash rate, that's what they've clearly decided to do on the March rate hike.

That was after the conflict had broken out.

That then puts pressure on households and stops the spending.

But what does that do to the economy?

As the reader Carl points out, is this going to result in

you know, stagflation where we've got, you know, the economy tanking but unemployment on the rise and inflation on the rise, that would be a very adverse outcome.

Absolutely.

And further cash rate hikes, while I think everyone thinks they're now a given, I don't know that they are because the RBA should be having some very tough conversations around the table about how much pressure is too much pressure and

for Australian households who are already under pressure because of petrol prices and because of diesel prices in particular, who are already under pressure and set to be under more pressure because groceries are starting to rise, because the cost of anything that moves is starting to rise as that fuel levy starts getting passed on from business to business to customer.

Exactly, and you only have to look to the last meeting where it was a split decision.

six to three, about, you know, they were finally having a robust discussion around that board table at the central bank.