Just like students rushing to meet an assignment deadline, the Reserve Bank of Australia’s review panel handed over their report to government last Friday. Given the size of their task, it’s not surprising that the panel used all the available time.
The report is being delivered in a challenging environment for the central bank. The cash rate has been increased by 3.5 per cent in less than 12 months, the fastest increase since the early 1990s when the RBA began using the cash rate to implement monetary policy. This has been necessary given the surge in inflation to over 7 per cent, the highest rate in a generation. Not surprisingly ‘cost of living pressures’ have grown as a community – and so political – concern.
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Jonathan Kearns is chief economist at Challenger and Adjunct Fellow at Macquarie University. He previously held a range of senior roles at the Reserve Bank of Australia.
