The Reserve Bank is expected to hike the official cash rate again on Wednesday to try to cool it. We had no sooner left Covid-19 lockdowns behind before we were plunged into another crisis – this time, the cost of living. “If [the Reserve Bank] moves more substantially to bring inflation down, the exchange rate will rise, reducing the cost of imports and easing those cost pressures,” he said. Despite that, Parliament is running substantial deficits and the Reserve Bank is running a strongly negative real interest rate. ANZ economist Sharon Zollner said the most important thing that would determine how long households felt cost of living pressure would be their level of debt.

Source: Stuff May 25, 2022 03:29 UTC