The RBA said in parliament this morning:
“Inflation is still too high and, in underlying terms, is not expected to be back in the top of the band until the end of next year,” she told the House of Representatives economics committee.
“Circumstances may change, of course, and the outlook is uncertain. But based on what the board knows at present, it does not expect that it will be in a position to cut rates in the near term.”
This is the RBA taking an admirable stand on Jim “Chicken” Chalmers’ “fiddle” of directing energy price relief at consumers and businesses via bill rebates instead of addressing the underlying causes of the energy shock.
The RBA is in parliament, justifying this position.
For the most part, it has refused to point the finger at either the government or the failed energy markets, preferring to describe demand as greater than supply across the economy.
However, it has also made the direct point that the major point of divergence in Australian inflation versus other economies is construction costs.
It also said that this was because labour costs are high owing to tradie shortages, and energy-intensive building materials, which are high and rising.
Both of these are the direct responsibility of the Albanese government via:
- excessive mass immigration that refuses entry to tradies to protect the CFMEU, and
- the refusal to address the gas cartel.
This is both admirable and quixotic for the RBA.
Refusing to cut rates puts pressure on the government to fix stuff.
But refusing to name the microeconomic causes of the pain, and refusing to admit that pollies will sustain energy rebates for as long as energy prices are high, is stupid.
Bond markets have ignored the whole pantomime and continue to price cuts sooner rather than later.
