If Rate Hikes Are on Autopilot, Just Say So
Big Australian rate increases are still very much the fashion. But that comes at a cost, especially if central banks won’t stop and take a breath.
Moving fast.
Photographer: Brendon Thorne/Getty Images
Are robots coming for jobs at central banks, too? Despite protestations to the contrary, the course of interest rates looks to be on autopilot in many economies. The highest inflation in a generation means officials are striding with deliberation toward a pronounced slowdown, if not global recession. If a slump is in the offing, it will be one that’s front-loaded.
The Reserve Bank of Australia, which raised its benchmark rate by another 50 basis points Tuesday, insisted that borrowing costs aren’t on a “pre set path.” The RBA used the same language last month, though minutes of the August board meeting suggested no other outcome was considered. Now, after four consecutive hikes of half-a-percentage point, it’s hard to accept assurances about variety until some is delivered.