RBA Hikes Cash Rate to 4.6% Amid Domestic Spending Pressures

Reserve Bank of Australia Governor Michele Bullock has announced a 15-year high cash rate of 4.6% in response to domestic spending and investment being stronger than expected, while productivity remains weak.

The conflict in the Middle East is exacerbating the situation by pushing oil prices up, but according to Ms. Bullock, this issue 'is making things much worse, but we did start from a position of excess demand anyway, and that's why we started raising interest rates even before the conflict started.'

When questioned about government spending contributing to inflation, Ms. Bullock avoided addressing the issue directly, instead discussing the effects of monetary policy on the economy.

Shadow Treasurer Tim Wilson has disagreed with this assessment, stating that the 'primary problem' is the government's 'spending addiction'. He claims that households have been restrained in their spending while the government continues to increase its outlays.