Top auctioneer Tom Panos has unleashed on Reserve Bank Governor Michele Bullock for suggesting that inflation is a bigger issue than high interest rates.
Ms Bullock also warned that the Reserve Bank is prepared to raise interest rates further if inflation does not improve as expected, triggering the fiery outburst from Mr Panos.
The Reserve Bank governor said something really stupid the other day: inflation hurts more than interest rates.
However, Mr Panos argued that the financial strain caused by high interest rates was much more severe than the impact of rising prices due to inflation.
If you think paying $1.50 extra for a cup of coffee because of inflation hurts a person more than having to pay $4,000 a month as their loan repayment instead of $2,500, Im letting you know youre wrong.
Ms Bullock, the person can make a choice on whether they buy a coffee or not, he explained.
But they dont have a choice of making their loan repayment, so youre not 100 per cent right at all.
The Reserve Bank has raised interest rates 13 times in 2022 and 2023 to a 12-year high of 4.35 per cent.
Real estate auctioneer Tom Panos (pictured) has called out the RBA governor Michele Bullock for saying inflation hurts more than interest rates
Reserve Bank of Australia Michele Bullock (pictured) also warned that the Reserve Bank is prepared to raise interest rates further if inflation does not improve as expected
Variable mortgage repayments are 70 per cent higher than they were in early 2022 as rates have climbed from starting with a two to beginning with a six.
Inflation during the last financial year rose to 3.8 per cent despite the most aggressive hikes since the late 1980s, with the consumer price index well above the RBA’s 2 to 3 per cent band.
Mr Panos argued: Whats this big deal that weve got to get inflation down to exactly between two and three per cent in that bandwidth?
Do you honestly think that a cup of coffee is going to go back down from $6.50 to $5.00 again?
However, many Aussies were also quick to call out Mr Panos take on inflation.
Maybe dont borrow so much? one said.
The RBA isnt there to stop people over borrowing, a second added.
Inflation hurts the poor the most - they dont own assets. Maybe start having a go at the banks for allowing people to take on massive mortgages, a third said.
Tom is a real estate spruiker, he just wants interest rates down so he can peddle his wares, another declared.
His comments come after Treasurer Jim Chalmers accused the Reserve Bank of smashing the economy with its interest rates strategy earlier this month.
However, Bullock claimed that inflation was the biggest problem.
High inflation hurts everyone, and especially the most vulnerable, she said.
It reduces what people can buy with their wages, erodes the value of savings, and it disproportionately hurts those on low or fixed incomes.
Former RBA economist Jonathan Kearns agreed.
The erosion by inflation is greater than interest rates, Dr Kearns told the AFR.
The impact of inflation is spread across all households, so everyone is feeling it. Interest rates are concentrated for just some households.