When a 13th Rate Hike Won’t Make Much Difference

Central bankers Down Under prefer their coffee mugs half full, making this a delicate moment for Michele Bullock to undertake her first interest-rate hike since becoming governor of the Reserve Bank of Australia. The bank, which broke a four-month hiatus with Tuesday's increase, risks tightening too much on the cusp of a global slowdown.

The quarter-point nudge in the main rate was widely expected and billed by economists as perhaps the last by the RBA this cycle. Quite a number framed it as a form of insurance or risk management. The idea is to take just a little more steam out of the economy to enhance the chances of inflation returning to the target of 2-3% by the end of 2025 without a recession. The trouble is that 25 basis points won't do much of anything, given the 400 basis points of tightening undertaken by Bullock's predecessor, Philip Lowe. The RBA has raised rates 13 times since May 2022.