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RBA rolls out public quiz to boost understanding of rate decisions
The Reserve Bank says only one in four Australians correctly link higher interest rates with lower inflation.
The Reserve Bank of Australia has launched a new public survey, asking Australians to test their understanding of how the RBA’s interest rate decisions affect inflation, employment and growth, according to Guardian Economics.
The RBA says its own research suggests people with higher economic literacy show greater trust in the central bank and also expect lower future inflation, while respondents answer about half the questions correctly on average.
The central bank warned that a common misunderstanding about how higher rates influence inflation could cause “frustration,” noting that only one in four respondents correctly identified that an increase in interest rates would lead to lower inflation.
The RBA’s public education team manager Peter Rickards said the impact of higher interest rates on inflation is “quite complex,” explaining that many people focus on higher business costs and price rises, while economists emphasize that higher rates slow the economy and reduce firms’ ability to pass on those costs.