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Wheeler: Why we're hiking interest rates

The classic description of how monetary policy operates is that central bankers, like our very own Reserve Bank, “take away the punch bowl just as the party is getting going.”

That is, they hike interest rates just as the economy starts to boom.

Reserve Bank governor Graeme Wheeler had an answer to that criticism when he appeared at a Parliamentary select committee yesterday.

“We spiked the punch bowl, in a sense. We dropped interest rates to their lowest level in 50 years to stimulate the economy,” he told MPs.

 

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