What caused the Reserve Bank to move away from its previously stated plans?
Namely… they were not going to move until:
- Inflation was comfortably in the 2%-3% range.
- Wages growth was above 3%.
The reasons that threw the Reserve Bank off course were simple:
- Russia invaded Ukraine and has caused a global disruption to Oil, Coal, Gas markets (you felt this when Petrol hit $2.20 per litre and became an election issue). Prices go up because this feeds into the price of everything.
- China decided to prolong its pursuit of Covid zero and has recently shut down Shanghai and then Beijing. Supply chains are in disarray (try getting anything delivered in a reasonable time – eg a car). Prices go up in a scramble for product.