08 Jul RBA’S TUG OF WAR; SURVIVAL OF THE FITTEST
Welcome to this week’s business and media intelligence update.
RBA’S TUG OF WAR
Since the Reserve Bank of Australia began lifting interest rates in May, much has been written about its “Goldilocks” approach to curbing inflation by trying to strike a balance between having a higher cash rate and an economy that can keep expanding.
But prominent economist Chris Richardson says that while the RBA is trying to find an inflation solution that’s “just right”, it’s landed itself in a “tug of war” with the Federal Government.
Richardson notes that the effects of the RBA’s rate rises in May and June were offset by the $17 billion in household support doled out by Canberra, while this week’s 0.5 percentage point lift in the cash rate will be wiped out by the $9 billion increase in minimum and award wages.
And the score so far in this tug of war? Richardson says it’s a draw. But stay tuned.
SURVIVAL OF THE FITTEST
Local and international private equity investors have tightened their purse strings, with venture capital investment falling 52 per cent in June compared to the same period last year.
OIF Ventures partner Laurence Schwartz told The Australian Financial Review that investors are moving away from funding businesses striving for “growth at any cost” and are focusing instead, on those with robust growth backed by a strong business model and solid underlying financial metrics.
Who would have thought?
The bad news, according to Mr Schwartz, is that this market shift in sentiment and strategy could trigger a further slowdown in investment volumes and values over the next six months.
THE (NOT SO) GREAT RESIGNATION
While we do tend to copy (and adapt) US fads, not all are embraced by Australians: pumpkin spice lattes, tipping, college sororities …
Now, the ‘Great Resignation’ concept can be added to that list.
While the phenomenon has certainly swept the US, where a record four million Americans resigned in April 2021, Australians aren’t showing the same desire to switch jobs.
Melbourne University economist Jeff Borland analysed Australian Bureau of Statistics data and found that while there was an uptick in resignations in the past year, rates of resignation were actually higher during the period between 1990 and 2012. 
Source: The Australian
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