Why the government subsidies are making it harder for the RBA to lower inflation | The Business

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Published 2024-08-07

Reserve Bank officials have emphasised government spending - including cost-of-living relief subsidies - are not helping it to bring inflation down.
But some economists believe the RBA made a mistake by leaving the cash rate at 4.35%, and should have hiked instead.
Steven Hamilton, Assistant Professor of Economics at George Washington University, says the RBA could be forced to raise rates if inflation becomes embedded in the economy. He says high interest rates and energy subsidies are working against each other.
In an interview with Kirtsen Aiken, he explains how government spending - including relief measures - work to slow disinflation.
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