Radio National Breakfast RBA lifts interest rates by 0.25pc for second time this year
Mar 17, 2026
Paul Bloxham, Chief Economist for Australia at HSBC and former RBA economist, explains the close board split over the recent rate rise. He discusses recession risks from tightening and petrol shocks. He explores how weak productivity caps Australia’s growth and argues productivity is the longer-term solution to lift living standards.
AI Snips
Chapters
Transcript
Episode notes
Board Split Over Timing Not Necessity
- The RBA board was divided because members agreed rates need to rise but differed on timing, with some preferring to wait for more data.
- Governor Michelle Bullock said the split was about whether to hike now or at the May meeting, not about if hikes were needed.
Slowdown Is The Only Way To Reduce Inflation
- A slowdown in Australia is necessary to bring inflation from 3.8% back to the 2.5% target, given low unemployment and no spare capacity.
- Higher oil prices will push inflation up short-term, so policy must induce a meaningful demand slowdown to lower inflation.
Low Productivity Lowers Growth Speed Limit
- Australia’s current growth (~2.6% GDP) exceeds the economy's 'speed limit' because weak productivity means capacity can't meet demand.
- Lifting productivity would raise that speed limit so growth can be stronger without triggering inflation.