I know nearly everybody here thinks we need 20% interest rates but I'll try & explain
I've marked all the rates in relation to cpi You can actually see all the rate cuts (red arrows) pre covid as they try get it back to a 3% target
The data intervals used to be every 3 months but it was changed to monthly at the end of last year So if we didn't change the interval we would have inflation falling off a cliff right now & the rba still trying to raise rates (purple arrows show all the rate rises post covid) It looks like it's a slow fall in inflation but it's not If they didn't change the reporting interval, we would only have 2 readings this year QoQ inflation has already returned to pre covid levels (should get confirmation on Wednesday)
Prior to covid we had inflation steady for years & with every rate cut we see inflation climb & flatten out again It takes time Doesn't just happen immediately & they don't keep cutting (apparently covid made their brains stop working)
I assume they wanted to get inflation back to 3%, that is until covid hit In 2019 after the last rate cuts which were probably uneceesary (maybe their brains had already stopped working by then), we never actually got to see where inflation settled Instead we ended up dropping rates to 0.1% which caused all these issues I've also marked the first rate rise at 0.35% (they actually believed with all their data that inflation was going to hold. I stupidly believed everything they said. I've learned my lesson) Now we've had the million rate rises since
At 2%, we have inflation settling at a certain level At 1.5% rates we had inflation higher at around 2% At 0.75% rates, we don't find out where it settles but I drew an orange arrow & it could've settled anywhere there At 4.1% (current rates), even if we were to stop raising rates now, inflation is going to hit 0% within 6 months & keep falling
Wednesday we expect 5.4% cpi I am going to say we beat that again & it comes back lower Everyone else will say we need higher rates because cpi is still higher than the rates
The same way the rba watched the cpi climb & not raise rates until it was too late, now we will watch the same rba (with a new governor but from the same fools that presided over the past few years) watch cpi drop off a cliff & continue to raise rates until it's too late
I don't have access to the real early data & I only work off what I see I still don't see this need to rush to raise rates as everybody else seems to believe but I guess I'm the resident madman (one of them anyway. Haha)
(20min delay)