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Mark Bouris strongly believes that the 11 rate rises over the past 13 months have “gone too far” and warned there could be drastic consequences if the RBA continues to target mortgage holders in attempting to control inflation.
In an interview with Sky News Australia, Bouris took aim at the RBA’s “rate regime”, labelling the decisions of the RBA as “way too prohibitive”.
“They’re going to push economic development and growth down to below two per cent.”
“That means people start losing jobs, then they stop paying their home loans or in the case of other sorts of debt, they run into debt problems (and) small businesses start to go out of business,” he said.
Bouris was questioned as to whether the RBA were far too late in“aggressively” raising interest rates. He said, “The question is: do they need to tackle inflation (this) aggressively?”
“If you’re trying to get inflation from 7%to 2 – 3%, that sounds ridiculous because you’ve got to reduce inflation by two thirds.”
“If the only way you can do that is increasing interest rates, then you’re going to break something on the way through.”
“It should have been a much gentler approach, it should have gone over a longer period of time,” he said.
“Instead of having eleven rate rises, which we had 50 base point rises, that’s really like 16 rate rises in 12 months. That is way too aggressive,” Bouris added.
“I’m not saying we don’t need to reduce inflation at all.”
“I’m saying we don’t need to be setting a target of 2 – 3% right now.”
Mark also discussed the recent Federal Government budget, with some growing concerns that the measures introduced in this year’s budget may not go far enough to tackle the inflationary issues Australia is experiencing.
Bouris believes the budget will “mildly contribute to inflation” but it’s not going “to be able to change the interest rate regime that’s actually going to have the major effects on anyone with debt.”
“So all the money that [the government is] giving, they’re giving to people who need the money. So I think that part of the budget is quite right. They’re a government. Governments are here to provide welfare as needed. So I don’t really have an issue around that.”
See all of Mark’s analysis by clicking the video above.
