Opinion
Can Australia compete in the new post-inflation world?
The “new neutral” medium-term interest rate will make the competition for capital much more intense. The country needs to get ready for that.
Richard HoldenEconomics professorThere continues to be plenty of speculation about the Reserve Bank’s next move on interest rates. Is the next change going to be a cut or a raise? Is there going to be a cut this year? If so, will it be one or two cuts?
The focus on near-term predictions is understandable against a backdrop of 13 increases in rates, and nearly a decade of official rates of 2.5 per cent or lower before that. But what is much more important for mortgage-holders, businesses and the Australian economy generally, is what happens to rates over the medium term.
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