Episode Details

The Reserve Bank of Australia has defended its cautious approach to raising interest rates, citing internal modeling that shows more aggressive hikes would have led to higher unemployment and increased mortgage payments. The banks current path, which peaked at 4.35% last year, is compared to higher rates in other countries. Critics argue for a rethinking of the banks dual mandate, but the modeling suggests that higher rates would have sped up disinflation but pushed unemployment up. Markets now expect a hike to 4.1% soon, but concerns remain over investor lending and housing woes.

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