Labor's Think Tank Admits Its Spending Fuels Inflation Amid RBA Rate Hike

The Reserve Bank of Australia (RBA) recently raised interest rates to a 15-year high of 4.6 percent, with another 0.25 percentage point increase last week.

This move has immediate and significant consequences for mortgage holders, but the RBA's decision is aimed at tackling inflation.

However, the Australian Labor Party's think tank, Labor's Economic Advisory Panel (LEAP), suggests that its own spending policies may be contributing to higher prices. LEAP believes that government expenditure can fuel inflation, particularly when it comes to wages and other forms of public spending.

The RBA's rate hike is a blunt tool for bringing down inflation, as it suppresses spending across the economy without addressing supply constraints that drive up prices.