But, just as the RBA thought things were stabilizing, inflation unexpectedly crept back up, causing the central bank to act. The economy, of course, is full of variables. No one predicted a pandemic or a war in Europe\u2014or how these global events would affect our economy. And that\u2019s where economists often fail. They try to predict a future based on the data available, but the world doesn\u2019t always play by those rules. As a result, interest rate forecasts tend to change as quickly as the economy itself, explains ABC News.<\/a><\/p>\n\n\n\n One thing that might change the course of action is the Australian dollar. As Peter Downes, a former Treasury economist, pointed out, the rising Australian dollar is now playing a bigger role in curbing inflation. The stronger Aussie dollar<\/a> means cheaper imports, and for a country that relies heavily on imported goods, this could make a big difference. If the Aussie dollar continues to appreciate, it could take the pressure off inflation, which would mean the RBA might not need to keep raising rates.<\/p>\n\n\n\n Interestingly, the Aussie economy has become so dependent on imports that raising interest rates doesn\u2019t have the same effect as it used to. In the past, higher rates would reduce demand, slow the economy, and help lower prices. But with so much of our economy reliant on imports, higher interest rates can actually strengthen the currency, which could make things cheaper in the short run. The result is that the usual tools the RBA uses to manage inflation are less effective than they once were.<\/p>\n\n\n\n![\"rate\"](\"https:\/\/en.econostrum.info\/au\/wp-content\/uploads\/sites\/7\/2025\/09\/rba-1200x727.jpg\")
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The Role of the Australian Dollar<\/h2>\n\n\n\n
Is the RBA Losing Power?<\/h2>\n\n\n\n