Former senior RBA researcher Peter Tulip said the central bank had not done enough to tame inflation and restore balance in the economy. Dr Tulip said the RBA must deliver back-to-back 0.5 percentage point rate increases at its next two meetings, taking the cash rate to a 15-year high of 4.85 per cent.
‘‘A front-loaded increase in interest rates will get the RBA closer to its unemployment and inflation targets quicker, so is desirable,’’ said Dr Tulip, who is chief economist at the Centre for Independent Studies.
‘‘If you don’t tighten enough, then you risk inflation expectations getting untethered. And hence, a big increase in unemployment later.’’
Internal RBA analysis released under Freedom of Information law last month included research concluding a 4.8 per cent cash rate would bring inflation back to the central bank’s 2 to 3 per cent target by the end of next year and lift unemployment closer to its estimate of full employment, which is 4.5 per cent.
Writing in The Australian Financial Review, Judo Bank economic adviser Warren Hogan said it had become increasingly clear the RBA’s job was far from done.
