Via the AFR:
Anticipating critics of normalisation – which may see the cash rate pushed towards 3.5 per cent – and who argue rate hikes will crunch heavily indebted households and cause an economic slump, Professor McKibbin said: “If we have become that vulnerable, do it now, not in a year when it’ll be much bigger.”
“Let’s have a mild bump now rather than a big one later,” he said, though he concedes the housing debt bubble is now so advanced that it is already too late for some households that have over-borrowed.
