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I wrote yesterday that the RBA must not hike today.
There is a good example of a central bank that found itself in a similar position in 2008.
Michael Hartnett at BofA notes that from August 2007 to July 2008, oil prices ranged from $70 to $140 per barrel, and subprime tremors started (BNP, Northern Rock, and Bear Stearns); oil peaked on July 3, 2008, the same day that the ECB raised interest rates by 25 basis points, which was one of the biggest policy blunders in history.
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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.