25 Jul The confusing economic picture
Key Points:
- For nearly 30 years Australia had benign economic cycles so the current environment may be a bit of a shock for many.
- Still low unemployment and still high inflation despite slowing economic growth are not that unusual because they both normally lag big swings in the economic cycle.
- The RBA and other central banks need to tread carefully and allow for the lags from the rapid rise in interest rates to work through – lest they end up pushing unemployment far higher than they need to in order to return inflation to target.