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Mercurial's avatar

I always wondered (well, ever since I have wondered about these things) why we had to get inflation down to 3%. What are the advantages of an inherently low inflation rate, over say one at 4 or 5%? Sure, when inflation is higher, you have wages and prices playing catch up, but so what? That's only a bit of mild disruption to the economy, surely. As long as inflation doesn't spiral out of control - is that the only real fear?

Or is it simply as you say, lower interest rates are good because they bolster the RBA's reputation - for keeping interest rates low?

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David Smith's avatar

CSL another tragic example.

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