Most of us get this economics question wrong. We’re paying for it
New research from the Reserve Bank of Australia indicates that most Australians misunderstand the relationship between interest rates and inflation. While many believe higher rates increase the cost of living, the bank notes that they are actually a tool to lower inflation.
Why it matters
Public misunderstanding of monetary policy can complicate the Reserve Bank's efforts to manage the economy and control inflation.
Save You have reached your maximum number of saved items.
Remove items from your saved list to add more.
Share A A A It sounds a bit like an insult. But when the Reserve Bank says most Australians don’t get how interest rates work, that’s a fact.
If you think higher interest rates push prices up and worsen the cost of living, you’re in the majority. You would also be wrong (for the most part – we’ll come back to that).
Many of us don’t understand how interest rates affect inflation. Matt Davidson It might be through no fault of your own, but the fact most Australians misunderstand how interest rates work is making the Reserve Bank’s job – and our lives – harder.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in