Why has the RBA raised interest rates for a record 7th straight month? High inflation – and worse is on the way

By Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

Pushing up interest rates isn’t something the Reserve Bank does lightly.

But what’s worrying the Reserve Bank – and why it increased interest rates for a record seventh consecutive month on Melbourne Cup Tuesday – is that inflation seems to become completely detached from the bank’s target band.

That target band of 2-3% was introduced in the early 1990s, at a time when that’s where inflation was. With one brief exception during the introduction of the goods and services tax, at the start…

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