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Supporting RBA rate hikes: Pain now is needed to prevent deeper crisis

Published July 27, 2026 at 9:02 PM UTC

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The RBA's interest rate hikes are a necessary medicine for an overheated economy. While the housing panic and retail slowdown are painful, they show that the policy is working to cool demand and tame inflation. Without these rate rises, Australia risked runaway inflation, which would have eroded savings and caused even greater economic damage. The housing market needed a correction: prices had become unsustainable, and first-home buyers were locked out. The current pain in retail and housing is a short-term cost for long-term stability. Myer's sales slowdown is not a sign of policy failure but of the economy adjusting. The RBA's mandate is to keep inflation between 2-3%, and it must act decisively. Homeowners who borrowed heavily should have prepared for rising rates. The alternative — leaving rates low — would have fuelled more speculative borrowing and an even harder landing later. The RBA should stay the course until inflation is clearly under control.