commitment that interest rates would not be increased for three years after the onset of the pandemic.The unconventional tool policy involved pegging the three-year government bond rate – then 0.1 per cent – to the overnight cash rate target. It was underscored by formal guidance reinforced by the governor in policy decisions.Not alone
“They underestimated the strength of the labour market, wages and inflation," said Su-Lin Ong, RBC Capital Markets’ chief economist. “But are they alone? Hasn’t everybody revised up their inflation forecast globally?”The US Federal Reserve and the European Central Bank also long held the view that inflation was temporary before conceding error. Central banks have become warier of making too many predictions about the future.
He appreciates that it was a tumultuous period. “It’s not a job that anyone craves,” he said. “I can’t say the RBA has not done worse than its peers.” In reality, he said, the commitment was only to keep rates low until the economic objectives were fulfilled, which happened sooner than expected. The central bank’s focus is the economy, not bond trader happiness, he added.
LoweMustGo There’s no question.
Single handedly responsible for imposing enormous financial distress on Australians. Encouraging Australians to take on debt on the assurance of no rate rises until 2024 at the earliest, leaving average Australians needing to pay $30k p.a. more interest, with more pain to come.
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