Australian Economy Australian interest rates

Terry ‘Crazy’ McCrann: Aussie interest rates “highly stimulatory”

Monday 31 October 2022

According to Terry McCrann, the official cash rate (OCR) is still a “ridiculously” low 2.6%, while the inflation rate was 7.3% in the year to September. This means Australia has a real interest rate of minus 4.7%, which is highly stimulatory.

McCrann argues that the real interest rate would still be a highly stimulatory minus 3.7% if the RBA increases the cash rate by 50 basis points in both November and December, and this is the very least the RBA must do:

Let me spell it out, yet again, to the clearly numerically challenged ‘experts’.

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About the author

Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.