Reserve Bank: No Rate Hike Despite Inflation

0:00This is Cory with the story. Keeping Adelaide in the know, you're listening to Adelaide news today. The Reserve Bank of Australia is wrapping up its meeting this week to decide on interest rates with markets betting on a hike. A senior economist at the Australia Institute, Matt Grudinoff, says the evidence points against it. Surging fuel prices from the Middle East conflict are driving up inflation, but he argues this shouldn't trigger higher rates. Fair oil and gas costs are acting like a natural break on spending already. Most fuels imported, so the money just flows overseas, cooling demand without the bank needing to step in. Earlier inflation came from temporary factors like travel and lodging, not ongoing demand pressures. This is a classic supply shock from war disrupting supplies. Not something rates can fix. Rate hikes target spending power, like bigger mortgage payments leaving less for other buys. We want lower petrol prices caused by shortages. Experts like former Reserve Bank Governor, Philip Lowe, agree monetary policy has little

1:03impact on supply shocks. The bank might let it pass through unless inflation expectations spike. Right now, weak wage growth shows workers aren't fueling price rises. Markets and some voices are pushing for a preemptive hike to signal toughness on inflation. Grudinoff warns it would just add pain for households without solving the core issue. We'll know the decision soon. D&N is brought to you by our sponsor link in the description. Do not just fall asleep, drift into what you are listening to, S-O-L-I-SallyPillow.com.