One context I think about when the RBA uses its so called big stick to curb inflation is that it hits mostly the home buyers. ie. the ones with the mortgages. With increasing costs of homes, the increasing size of mortgages doesn't this mean a greater effect of each interest rate rise. Maybe a multipication factor etc.
Can't be bothered crunching the numbers, but its got to be obvious that as loan size increase, a small 0.25% has bigger bang for its buck. Then a NORMAL 7% interest rate maybe means 6.5% now. I think Mr Stephens would be more aware of this than silly ol' me, but as leverage increases surely the sensitivity to every rates increase does too.
