A rate rise next Tuesday would echo the RBA’s rate increase during the 2007 election that upset Liberal prime minister John Howard and treasurer Peter Costello.
The Reserve Bank of Australia has again underestimated the strength of inflation, and it should now get off the fence and begin to raise interest rates next week, regardless of the federal election.
A gentle 0.15 of a percentage point cash rate increase to 0.25 per cent is a logical decision at Tuesday’s board meeting of the independent central bank.
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John Kehoe is economics editor at Parliament House, Canberra. He writes on economics, politics and business. John was Washington correspondent covering Donald Trump’s election. He joined the Financial Review in 2008 from Treasury. Connect with John on Twitter. Email John at jkehoe@afr.com
