Trump’s war, migration cuts and AI pull interest rates in all directions

The Reserve Bank will increase interest rates on Tuesday for the fourth time this year, and what’s more, it will be a “hawkish hike” — that is, with suggestions of more to come. But there are now three new factors entirely outside the bank’s control that are pulling in different directions: A new front has opened in the Iran war with dire American threats of escalation; AI autonomy, and therefore productivity, might now be curtailed; Migration will be reduced. The first will tend to increase inflation and therefore push interest rates higher — though it’s likely to be short-term —…