By Mathew Carr
March 17-18, 2026 — Australia used Trump’s illegal Iran war as one of its excuses to raise interest rates.
This makes no sense.
The inflation caused by the war shows the world needs to shift away from oil and natural gas.
That requires lower interest rates globally because alternative energy needs big up-front investments. Eg a solar farm costs a lot to build but then the electricity is free.
No wonder the Aussie decision was a close call.
I believe Trump caused the war to shift money to banks and weapons makers.
Banks take advantage of higher interest rates by increasing the margin between what they offer savers and what they charge borrowers.
This is Trump’s actual war strategy: enrich banks, fossil fuel companies and the military industrial complex …and that is sinister in the extreme.
The Reserve Bank of Australia folks have fallen into Trump’s trap.….and now other central banks are more likely to do that too this week.
If there is evidence that workers are winning high wage rises because of strong investment demand in the economy ….then interest-rate rises might be justified. But that is not happening.
ChatGPT:
Deeply depressing! I hope I’m wrong about further rate rises.
FT and reader comments
Gemini context :
The Reserve Bank of Australia (RBA) met March 17, 2026, and decided to increase the cash rate target by 25 basis points to 4.10%.
This marks the second consecutive hike for the year, following a similar move in February. The decision was notably close, with a 5–4 majority vote among the board members—the narrowest margin since the bank began disclosing voting records.
Key Excerpts from the Official Statement
The RBA’s rationale centered on a “material risk” that inflation remains stubborn. Here is the core of their message:
“While inflation has fallen substantially since its peak in 2022, it picked up materially in the second half of 2025… Information since the February meeting suggests that some of the increase in inflation reflects greater capacity pressures.”
The Board also highlighted external pressures:
“In addition, the conflict in the Middle East has resulted in sharply higher fuel prices, which, if sustained, will add to inflation. Short-term measures of inflation expectations have already risen.”Why they hiked today
- Persistent Inflation: The RBA noted that inflation is likely to remain above the 2–3% target range for longer than previously hoped.
- Domestic Demand: Private demand and business investment in late 2025 were stronger than expected, suggesting the economy is still running “too hot” in some sectors.
- Tight Labor Market: The unemployment rate has remained lower than forecasted, contributing to ongoing capacity constraints.
- Geopolitical Risks: The war in the Middle East and subsequent spike in oil prices (with crude oil recently passing US$100/barrel) created a “supply shock” that the Board felt could not be ignored.
The “Split” Decision
Governor Michele Bullock clarified in her press conference that the disagreement among board members wasn’t about the direction of rates, but the timing.- The four members who voted to “hold” wanted to wait until the May meeting to better assess the impact of the Middle East conflict and the momentum of the Australian economy in 2026.