RBA will burn rates while Fed fiddles


Some sanity at last from Australia’s worst newspaper, the AFR:

The Reserve Bank of Australia might have to cut interest rates before the United States, as persistently high inflation in the world’s largest economy casts doubt over whether the Federal Reserve can do anything this year.

As the world’s most powerful central bank because of the size of the financial markets it oversees, the Fed traditionally leads a global rate-cutting cycle, but market pundits say this time could be different.

That’s because other countries, including Australia, have experienced a sharper slowdown in economic growth from the higher borrowing costs than the US.

No shit. Australia’s leading monetary economist, Gareth Aird at CBA, has made the point with a series of devastating charts.

Households are being annihilated:

Domestic demand is being annihilated:


Disinflation is on track:

While taxes the crap out of everyone:

RBA cuts first and hardest despite Albos immigration mania.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.