The RBA’s credibility is at stake if it does not raise rates
The policy decision is clear-cut. Not only should the central bank lift rates on Tuesday, but it also needs to signal that an increase in December is likely.
The board’s reputation has already been heavily compromised over the past three years. There is mounting evidence of a loss of credibility in private sector economists’ forecasts, in financial market pricing of the cash rate and the behaviour of the residential property markets.
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Warren Hogan is managing director of EQ Economics.
