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In a truly crazy moment of hawkish overkill, the Lunatic RBA has hiked rates directly into a demand-destroying energy shock that has all the hallmarks of a second Global Financial Crisis.
It doesn’t matter if the shock turns out to be short-lived. The issue is that the shock is a highly asymmetric risk of a severe outcome.
It costs the inflation outcome very little to wait one meeting.
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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.