RBA Pounds Australia Into Recession

Australia appears fully committed to flying into Recession, and as quickly as possible?

Today we saw the Westpac Melbourne Institute Leading Economic Index come in flat at zero. This is after a long series of highly problematic outcomes. In fact, this is perhaps the most dire data curve for this index in decades.

First quarter growth in Australia was just 0.2%. It is therefore very much on the table that the Australian economy is already in contraction in this current second quarter. We may already be half way through the recession and are just waiting for the backward looking economic data surveys to pop up and confirm this dismal state of affairs.

There is no doubt the economy has downward momentum, and the RBA Governor while aggressively hiking rates after having kept them at historic crisis levels, even though the economy was booming after lockdowns, has had the ‘Scrooge’ to suggest Australians should spend less and work harder to offset his rate hikes. This is utterly outrageous and goes to the heart of what is wrong with the least respected central bank in the OECD. The bank is intellectually crippled by its false elitism and detachment from the real economy for true Australians.

The ‘Reverse' Bank of Australia continues to operate in precisely the way that required an OECD urgent review and calls for change, as well as the Australian Independent Review that saw the bank badly wanting.

Well we have had the review and we have the findings. Which Treasurer Chalmers should require the implementation of immediately. What is the delay? The harm being done to Australian families is impossible to quantify. It is on going and very real. Mortgage and borrowing stress is tearing families apart with long term problems to follow for all involved.

Yet, the least capable of central banks continues to simply deal with inflation, belatedly, (remember they said that the global inflation wave would not come to our shores), and is dealing with inflation straight out of a 1960s text book. This is what we as a nation get for paying our Governor of our central bank twice what the Chairman of the Federal Reserve gets? No better than decades old and no longer relevant policy response?

This is an economic disgrace. On an intellectual level and for our nation.

We have the solution. There can be no more delays. The Treasurer must forcefully implement all the recommendations of the independent review.

Perhaps the new Expert Panel will be able to get their heads around the fact that inflation is a very different animal now to what it has been historically. Inflation at this late point can only be left to run its course, and without pounding the Australian economy into the recession pavement, through last century monetary policy stupidity.

We desperately need a smart Reserve Bank. We do not have one.

The Australian people deserve the implementation of the recommendations.

Not the old elitism of look after your mates among politicians and bankers generally.

Without an immediate replacement of the Governor and Board with the new Expert Panel, Australia is doomed to a deep dark recession.

Clifford BennettACY Securities Chief Economist

The view expressed within this document are solely that of Clifford Bennett’s and do not represent the views of ACY Securities.

All commentary is on the record and may be quoted without further permission required from ACY Securities or Clifford Bennett.

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.