I am reading George Soros' book "The crash of 2008 and what it means". In it, under the section on interest rates, he says that "the way out of a deflationary trap is to first induce inflation and then to reduce it".
He is speaking in context of the US economy, so not sure what the impact will be here in Oz. Given that we haven't had the same level of deflation in asset prices (in fact the opposite) to me it makes sense that RBA lift interest rates earlier.
