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Warning against rate hikes amid fragile recovery

Published July 25, 2026 at 9:02 PM UTC

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Raising rates too quickly risks derailing Australia's post-pandemic recovery, which is still uneven. Tech inflation is largely a supply-side problem, not a sign of overheating demand. Semiconductor shortages and shipping bottlenecks are easing, and prices could moderate on their own. The RBA should wait before tightening, as many households and small businesses are still vulnerable. Higher mortgage rates would reduce spending and could tip the housing market into a downturn. The labour market, while strong in some sectors, remains patchy. Premature rate hikes could slow hiring and wage growth. Moreover, global central banks may not move in lockstep, risking an exchange rate appreciation that hurts exports. A patient approach allows more time to assess whether tech inflation is truly embedded or temporary.