The RBA gets aggressive. About time

 The RBA surprised most market participants (and me who thought it would be 40 bp)) by raising the cash rate by 50 basis points.

This was an aggressive move and it was about time. The RBA has been caught out and surprised by inflation rising to levels they clearly did not expect. The move by the RBA will mean to people they mean business. however it must continue.

I have said previously I think they should go to 1.5% so interest rates are back at neutral levels and then take a breather and watch the reaction. I now think they should move to say 2-2.5% and then take a breather. Inflation reaching 6-7% is way too high.

For two takes on RBA action

• the-housing-game-has-changed-interest-rate-hikes-hurt-more-than-before
  
• expect-the-rba-to-go-easy-on-interest-rate-hikes-from-now-on-we-cant-afford-rates-to-climb-as-steeply-as-the-market-expects