Gottiboff and a phalanx of other dills say the RBA must follow the Fed:
And among the “crew” is our own Reserve Bank Governor Philip Lowe who will now be forced to follow his captain and raise Australian interest rates to a level that will almost certainly not only cause a recession, but lower share and property prices led by dwellings and office blocks.
Rubbish.
The FOMC is in the process of crashing the US economy. It has a solid rationale to do so, fighting to stop a self-fulfilling wage-push inflation cycle.:
On the other hand, Australia has no such problem. Wages are beginning to rise but remain well below the 4% needed to make inflation sustainable:
These rises are a very welcome development after a decade of wages lagging profits owing to the mass immigration worker rorting business model:
There are three reasons why the RBA should not be concerned about wage inflation in Australia getting out of hand:
- Albo’s cowards have already rebooted the mass immigration model and cheap foreign labour is pouring back into the country. The scale of it can be characterised as a cheap labour supply shock.
- The economy will be crushed by the RBA tightening already in place, not least owing to the fixed-rate mortgage reset that has locked in a 30% real house price crash.
- A global recession centered around China is on its way and commodity prices are going to crash (with the exception of Europe-exposed energy).
All of these things are going to sit on local wage inflation. The RBA can afford to wait it out, even if Albo’s cowards don’t fix energy. If the AUD falls then all the better.
The RBA must fight the Fed.