RBA Officials Caught Off Guard Over Inflation Modeling Flaw

Reserve Bank officials faced intense questioning in a parliamentary grilling over their inflation modeling. Governor Michele Bullock and Assistant Governor Sarah Hunter were pressed by Liberal MP Simon Kennedy about how they model inflationary effects of government spending cuts.

Kennedy asked if the Reserve Bank had considered a scenario where government spending was reduced by 2%. Bullock replied, 'We haven't done that scenario, let's put it that way.'

When pressed further, Hunter admitted that they hadn't run such a scenario recently. The exchange sparked concerns about the accuracy of the Reserve Bank's inflation modeling.