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Actually, on thinking on this with XBen making the last point, the whole purpose of raising interest rates is to increase the cost of money, thereby reducing borrowings & decreasing the velocity of the circulation of money (reducing the money supply). This is a tool used by central banks to...

Bill, So why do you feel we are unlikely to have growth. Considering we've been the best performing OECD nation for a few years with a good consistent growth of around 3%, why should this suddenly fall and inflation take off? Cheers, Aceyducey

Bill, I appreciate your thoughts. Definitely the RB doesn't control interest rates - they just attempt to give off the vibes that they do. And all the government's tools to manage the economy are reactive and as prone to causing swings as dampening them. However, I do not believe there...

Interesting view Bill, The RB is tasked specifically with maintaining inflation within a 2-3% band. If it deviates from this band the governor loses his job :) So the RB will not be shy in using interest rates to reign in runaway inflation. if the situation gets too bad (ie inflation...