The latest from the RBA – Statement On Monetary Policy November 2023, outlines the bank’s latest thinking. The Reserve Bank updated its economic forecasts, which explain why it raised interest rates this month – from 4.1 per cent to 4.35 per cent after four consecutive pauses. And importantly, it shows just how the economic engine is misfiring, with households very much on the front line.
While the business sector, overall, appears to be doing fine, it appears working-age households will continue to do the heavy lifting on containing inflation via higher interest payments, cutting their individual consumption and falls in real wages that are expected to continue until the middle of next year. And due to the combination of stubbornly high inflation and relatively weak income growth, the RBA now expects real household disposable income — a key measure of living standards — to keep sliding sharply until the second half of next year.
And to underscore this, recent OECD data shows that Australian households have suffered the biggest fall in real per capita household disposable income of any advanced economy over the past year. In the 12 months to June, Australian household incomes slumped 5.1 per cent, the sharpest fall recorded across the OECD.
Real view management of the monetary settings from the RBA are simply not working.
https://www.rba.gov.au/publications/smp/2023/nov/
http://www.martinnorth.com/
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