Thursday, February 16, 2023

Can you really blame the RBA?

Inflation is everyone's problem. When prices go up for all things, our ability to buy decreases. In order to reduce inflation, the cost of borrowing money has to increase to reduce demand. However, when you are on a mortgage, this creates a double whammy effect on your budget. While things go up in price, so does the interest rate on your house which means your loan repayments increase as well. 

Here is the inflation chart for Australia which gives you an idea about why the interest rates have had to increase significantly over the last year. Inflation has shot up since the COVID pandemic and the RBA needs to increase rates to reign it in. With inflation at almost 8% this year which is more three times the target range, the warning of more rate rises to come could be one way the RBA can reduce inflation in the coming month before another possible increase. With everyone piling on the RBA, you have to wonder whether the RBA can be blamed?

No comments:

Most Read Posts