OPINION: If the RBA is planning to lift rates until it is happy with productivity, then we are all in big trouble.
The Reserve Bank seems so determined to continue raising interest rates that it is relying on outdated productivity growth estimates to justify its decisions. No policy lever can magically lift productivity growth in the coming months, so the outlook for interest rates and the economy is bleak.
The national accounts released the day after the board meeting also revealed that household spending in the March quarter rose by just 0.2 per cent, the slowest quarterly growth since the COVID-19 delta lockdowns.As for all the savings buffers built up during the pandemic that the Reserve Bank had been indicating were being used to sustain strong consumer spending, the national accounts revealed the household saving ratio declined to its lowest level since June 2008.
The next productivity numbers will be released with the national accounts on September 6, the day after that month’s Reserve Bank board meeting. So when the board meets on the first Tuesday of the next three months, it will know only the productivity numbers that were released last Wednesday – which by then will be three to six months old.
Following the opening of Australia’s borders, immigration is surging, as sought by business and promised by the Albanese government at the Jobs and Skills Summit.
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