Talking Points Ep18 – Recession Warning | Good News| Dark Picture | A Stuff Up
- December 21, 2023
- Posted by: Paul Ransley
- Category: Newsletter
This week’s media coverage of inflation and interest rate hikes has verged on the hysterical in some instances although a few well-considered and thought provoking pieces have emerged from the fog.
Today, I have highlighted 5 expert opinions that I think have added to the debate and perhaps increased understanding by those of us whose economic credentials are poor. Among them is a brutal takedown of the Reserve Bank of Australia, by Sky Business Editor, Ross Greenwood.
Here they are in no order of importance:
1. Recession Warning
Inflation may already be in retreat and the RBA should go easy hiking interest rates or risk a recession, writes Peter Martin the Business and Economy Editor of The Conversation, . He argues that higher rates could add to inflationary pressures – not reduce them. On the other side of the fence.
2. Good News
The rise in the cash rate is “unambiguously a good news story” according to Terry McCrann writing in Today’s News Ltd publications (it’s behind a paywall unfortunately…but I have included a link if you have a subscription). The key reason it is such good news? It shows the economy is running strongly and the RBA has finally caught up with the inflationary challenges that have arisen. McCrann argues that the RBA should have lifted rates last year.
3. Dark Picture
Writing in Smart Company, the former CEO of the Council of Small Business, Peter Strong, focusses more on inflation than interest rates and describes how it is likely to effect SME’s (I have included the link below) It’s not a pretty picture he paints. He provides some likely future scenarios and some tips on how owners of small business can cope with rising inflation.
4. Don’t Panic
How will rising interest rates effect your share portfolio? There is no need to panic, AMP Economist, Dr Shane Oliver, tells The Motley Fool. He says rising rates from a low base are normally not initially bad for shares. It claims the early casualty is the RBA’s credibility and in that vein….
No.5 – A Stuff Up
The cash rate increase was the latest in a long line of stuff ups by the RBA and its governor Phillip Lowe, writes Sky News Business Editor Ross Greenwood, in The Australian.
Greenwood sinks the slipper into the RBA for suggesting Australia was immune from the inflationary forces afflicting other parts of the world and for encouraging Australians to believe that interest rates would remain low. It turns out to be bad news for young home buyers who borrowed large sums on the back of that advice.
So, those are my top commentaries on inflation and rate rises from the past week. If you have others let us know in the interest of furthering our education.
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