Posted November 01, 2018 09:17:25 Some people might have been a bit concerned by the announcement from the Reserve Bank on Thursday that it would not be keeping the current $US50 billion ($61 billion) rate of interest on cash.
If that’s the case, it’s hard to see why this should matter.
The rate of inflation is expected to stay below 2 per cent this year, so the Reserve has no reason to keep it artificially low.
Instead, it is likely to be hiking rates on the money market, with rates for longer term bonds and corporate bonds increasing.
This is a change from its usual policy of hiking rates when inflation is above 3 per cent, but it’s important to remember that inflation has historically been very low in the last decade or so.
Even before the announcement the Bank of England, the Federal Reserve and other central banks had all been hiking rates, and most of the recent rate increases have been below that.
Since then, inflation has averaged around 2 per.cent annually, which has led to the current interest rate cut being very much like a “haircut”.
There are still some people who will argue that raising rates will help to keep inflation down.
But even if they’re right, there are a number of other reasons why a rate cut is not a good idea.
First, the rate cuts do not have a real impact on the economy.
In fact, the interest rate cuts may even be contributing to a slowdown in growth, with many economists suggesting that the interest rates are simply an excuse to keep the economy from growing faster.
A more realistic concern would be that the rate hikes may encourage people to spend more money to buy more houses, cars and other consumer goods.
Second, the impact on households will be limited.
While it might make sense for a household to spend some of the money they’ve saved to buy a home, this may not be a good reason to reduce the amount they have saved to pay down the mortgage.
Third, the Reserve could have a very negative impact on inflation.
For example, if interest rates were to increase, it could lead to a spike in inflation.
This would also have an impact on wages and other income, and could affect household purchasing power.
Fourth, there is an argument that raising the rate of return on a bond will cause inflation to rise.
And, as we’ve seen with the recent interest rate hike, this could have significant negative effects on consumer confidence.
Fifth, the risks of inflation are higher now than they were before the central bank cut rates.
We’ve seen some recent signs that the Fed has become overly cautious in its monetary policy.
It may not have been as cautious as it used to be, but the fact that the economy is slowing down in a way that has led the Reserve to increase interest rates is a concern.
Finally, it may be difficult for many people to be comfortable with a rate hike if it leads to a higher cost of living.
There is a lot that could go wrong in this situation.
One thing we can say with confidence is that the Reserve is not going to change its monetary policies, even if it seems that way at times.
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