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Could the RBA’s rate rise send Australia into recession?

5/5/202616 min

The Reserve Bank has raised interest rates again. The cash rate is now 4.35%, after the third rate hike in a row. 

For Australians already stretched by the cost of living, it means another hit to mortgage repayments, rents and household budgets. 

And while the decision was widely expected, the reason behind it is more complicated. Some economists are calling it the “Hormuz hike”, a response to global oil prices, the war in Iran and fears inflation could skyrocket.

Today, economist and co-CEO of the Australia Institute, Dr Richard Denniss, on why the Reserve Bank is making Australians pay more to contain inflation, and the risk that it goes too far. 

 

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Guest: Economist and Co-CEO of the Australia Institute, Dr Richard Denniss

Photo: AAP Image/Dean Lewin

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Clips

Rates won’t fix oil shock
Cutting a leg for a toe
RBA’s forecasting failings
Why Australia’s the outlier
Recession risk over a fuel shock
Calling for fiscal ‘misery’ too
One lever, one target
Debunking inflation expectations
More hikes still on table

Transcript preview

First 90 seconds

  1. Michele Bullock· Soundbite0:01

    Now, I understand this is a really difficult time for households who are already facing higher fuel prices and other cost of living pressures, but we must get on top of inflation now so that it doesn't get away from us.

  2. Daniel James· Host0:11

    [pensive music] The Reserve Bank has raised interest rates again. The cash rate is now 4.35% after the third rate hike in a row.

  3. Michele Bullock· Soundbite0:21

    Developments in the Middle East remain highly uncertain, but under a wide range of possible scenarios, the conflict adds to global and domestic inflation.

  4. Daniel James· Host0:29

    For Australians already stretched by the cost of living, it means another hit to mortgage repayments, rents, and household budgets. And while the decision was widely expected, the reason behind it is more complicated. Some economists are calling it the Hormuz hike, a response to global oil prices, the war in Iran, and fears inflation could skyrocket.

  5. Michele Bullock· Soundbite0:52

    Australians are poorer because of this shock. We are poorer, and there is no way out of that.

  6. Daniel James· Host0:58

    [pensive music] I'm Daniel James, and you're listening to 7.00 AM. Today, economist and co-CEO of the Australia Institute, Dr. Richard Denniss, on why the Reserve Bank is making Australians pay more to contain inflation and the risk that it goes too far. It's Wednesday, May 6. Richard, thanks for joining us again. This is a

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