RBA caught in political spin

One of the great myths in Australia’s battle against the worst inflation crisis since the 1980s is that our central bank can keep rates miles below global peers because monetary policy is more potent here.

The narrative goes that because of Australia’s preponderance of variable-rate home loans compared with countries like the US, where most borrowers have fixed-rate debt, a 100 basis point increase in rates here has greater influence on inflation.