RBA Cash Rate Hike Misguided and Inequitable

The Reserve Bank of Australia recently raised its cash rate to combat inflation, but this move is being criticized as an 'act of pointless aggression' against most Australians. The bank's decision was made to address rising petrol prices and gas bills, but the actual cause of the inflation spike is a war in the Gulf.

The war has caused shipping insurers to triple their premiums, leading to higher costs for tankers and ultimately contributing to the price hike. Meanwhile, a small minority connected to the energy oligopoly are profiting handsomely from the situation, while the majority feel the pain.

Central bankers have been criticized for misunderstanding the type of inflation at play. There are two types: demand-pull inflation, which occurs when households and firms spend more than the economy can produce, and cost-push inflation, which is caused by external factors such as wars or natural disasters.

The RBA's decision to raise interest rates will not address the root cause of the inflation problem but rather suppress Australians' spending, wages, and ability to keep a roof over their heads. It is argued that this move is treating the symptoms rather than the disease.