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@human4675 the market takes into account what the RBA says and how credible it is. late last year and early this year the market correctly judged that the RBA lacked credibility.

@cantgetright your calculation of the taylor rule interest rates coming to 5-6% was incorrect. anyway i'm not arguing for or against the taylor rule specifically. the main point i am trying to make is that interest rates might have to go higher to kill inflation. maybe much higher...

@thechristianhippie i don't expect interest rates will get that high but they might get much higher than where we are now, especially if the property market recovers somehow. don't forget that strongly negative real interest rates are highly stimulatory. that's not the taylor rule, that's...

@cantgetright https://www.investopedia.com/terms/t/taylorsrule.asp#:~:text=The%20Taylor%20Rule%20is%20a,above%20the%20annual%20inflation%20rate.

@dmit5487ivan in some ways yes, in others not. if the property market keeps rising and wages increase to meet CPI interest rates will have to go much higher. hopefully that won't happen.

@dmit5487ivan by the taylor rule the equilibrium rate should be 2% above inflation, so actually bring inflation down it should be higher than 10% https://www.investopedia.com/terms/t/taylorsrule.asp#:~:text=The%20Taylor%20Rule%20is%20a,above%20the%20annual%20inflation%20rate.

@dmit5487ivan the biggest single worry about hiking interest rates was about what it would do the housing market. with CPI currently at 8% the RBA's cash rate should in theory be up around 10-11%. i doubt the housing market would withstand that. EDIT...

After remaining virtually flat in February (-0.1%), CoreLogic’s national Home Value Index (HVI) posted the first month-on-month rise since April 2022, up 0.6% in March. Dwelling values were higher across the four largest capital cities and most of the broad ‘rest-of-state’ regions, led by a...