Stephen Halmarick

Well I've been a financial market economist for 36 years so I've seen a few cycles over the years and there's definitely been some times where it's been much busier than others and this is certainly one of them.

Yeah, that's right.

Yeah, I was working actively in 1994.

And the memory, the Reserve Bank increased interest rates by 275 basis points in just a few months.

And of course, the interest rates were much higher than they are today.

So it's a global increase in the inflation and monetary policy needs to be tightening globally.

And the Reserve Bank here in Australia is just part of that.

Well, the real aim here for the Reserve Bank is to get inflation back down into the target range.

As you said, 2.5% is the middle of the target range.

So it's 2% to 3% on average.

So the headline rate is currently 5.1% and heading higher.

And so they need to get interest rates up to a point that brings inflation back down into the target range.

And the higher interest rates do that by weakening demand.

Essentially, the way I think about it is people need to spend more of their income in servicing their mortgage.

So then they have less income to spend on everything else.

The Reserve Bank is saying it probably will take the cash rate getting to at least two and a half percent to do that.

We actually think it'll be a little bit lower than that.

But certainly the inflation outlook is the key number the Reserve Bank is looking at.

Well, yes, the Reserve Bank Governor described a 25 basis point move as business as usual after the first move in May.

And then they proceeded to do two unusual moves of 50 basis points each for June and July.