What the RBA wants Australians to do next to fight inflation – or risk more rate hikes

Meg Elkins, RMIT University

When the Reserve Bank of Australia (RBA) board voted unanimously to lift the cash rate to 3.85% on Tuesday, the decision was driven by one overriding concern. It wants to stop the rising cost of living from becoming entrenched.

For some, like self-funded retirees, the rate rise was good news. Higher interest means their savings and term deposits will earn more. But for many others, including first home buyers who might have stretched themselves just to get a foot into the housing market, it was a very bad day.

RBA Governor Michele Bullock acknowledged that, saying:

I know this is not the news that Australians with mortgages want to hear, but it is the right thing for the economy.

She warned the alternative – letting inflation keep rising – would be even harder for more Australians.

So what’s the psychology behind the RBA raising rates now and leaving the door open to further hikes if needed? And what does the central bank hope Australians will do in response?

The price squeeze you’re feeling

There’s a striking gap between how the RBA describes the economy and how most Australians experience it.

On paper, things look healthy: unemployment is low, wages are growing.

But as Bullock acknowledged on Tuesday, the daily reality has felt very different.

The price level has gone up 20% to 25% over the last few years, and people see that every time they walk into a supermarket, or they go to the doctor, or whatever – that’s I think what’s hurting people.

That relentless price squeeze is not something you forget, even when the rate of increase starts to slow.

What’s driving inflation up?

The headline consumer price index (CPI) hit 3.8% in the year to December, well above the RBA’s target band of 2–3%. The “trimmed mean” – the underlying measure the RBA watches most closely – rose to 3.3%. Both are too high and moving in the wrong direction.

Bullock singled out three factors contributing to inflation. Each behaves differently and requires a different response.

Housing was the single largest contributor to inflation in December, up 5.5% over the year. That includes rents, which rose 3.9% (or 4.2% stripping out government rent assistance), as well as insurance, utilities, and new construction costs, which rose 3% as builders passed through higher labour and material costs.

There is an irony here. Rising interest rates are intended to cool demand, but they slow housing construction. Limited supply of housing is what’s pushing rents up in the first place.

“Durable goods” are the things we buy to last, such as cars, refrigerators, washing machines, televisions and furniture. Demand for many of those has been higher in the past year.

“Market services” are items such as restaurant meals, taxis, haircuts, gym memberships, medical appointments and holiday travel.

The RBA watches these carefully, because these are services priced by supply and demand in the domestic market. Those prices tend to be “sticky”: once they start rising, they don’t come back down easily.

Wages are also a big part of market services inflation. If the people providing those services are earning more, the cost goes up.

How rate cuts made shoppers relax

This is where the behavioural psychology gets interesting.

The RBA cut interest rates three times in 2025. Each cut sent a signal, whether intentionally or not: it’s OK to spend a bit more.

And spend we did. CommBank data shows Australians spent A$23.8 billion over the two-week Black Friday period, up 4.6% on the year before.

It’s a cautionary tale about “rational expectations”. Each rate cut potentially fuelled the belief that more would follow.

If people feel like they can afford to spend, then they spend. Businesses, sensing demand, may raise their prices to match. That’s exactly the self-fulfilling dynamic central banks worry about.

The 3 ways the RBA hopes we’ll react

When prices go up, as they have been, workers ask for bigger wage rises to keep up. To pay higher wages, businesses lift prices to protect their profit margins. Together, that can create a “wage-price spiral” that becomes very hard to break.

The RBA will be hoping Australians respond to this rate rise in three ways:

• spending less

• saving more

• not asking for big wage rises (although they’d never phrase it that way).

RBA Governor Michele Bullock described raising interest rates as “a very blunt instrument” to bring inflation down, and noted setting rates is “not a science. It’s a bit of an art, really […] We’ve just got to respond as best we can.”

The RBA can’t undo the price rises that have already happened. It can only try to slow down further increases.

Meg Elkins, Associate Professor in Economics, RMIT University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Read More........ → February 06, 2026

Time to move beyond billboards: Australia’s tourism strategy needs to embrace the personal

boxiang Xiao/Unsplash Katharina Wolf, Curtin University

Australia continues to rely on billboard-style and cinematic advertising to promote itself as a destination. This approach, used for decades, presents a national image built around iconic sites and curated visuals.

While this style may appeal to tourism bodies because of the celebrity-fronted content and central control, it is increasingly out of step with how modern travellers plan their journeys.

In 2025, travellers are scrolling TikTok, watching Instagram reels, and browsing peer reviews. Tourism campaigns should meet people where they are.

Authenticity beats curated content

Social media is a central source of travel inspiration, particularly for Gen Z and millennials, according to a global survey of 20,000 respondents across all age groups.

Almost 90% of young travellers discover new destinations through TikTok, and 40% say they have booked a trip directly because of something they saw on the platform.

What matters most is not just reach, but trust.

Influencers shape behaviour from desire to booking and post-trip sharing. Their impact rests on perceived authenticity. Real people telling stories resonate more than stylised ads.

Storytelling sits at the heart of this shift, and tourism providers can engage in this form of storytelling, too. Airbnb’s Host Stories campaign invites hosts to share personal narratives through short videos and blog posts.

By highlighting real hosts and their daily lives, marketing moves beyond selling places and instead emphasises authentic, locally rooted connections that resonate with travellers.

It introduces travellers to places through personal experience, grounded in local knowledge and genuine connection.

User-generated content builds trust

A 2025 study found user-generated content enhances emotional connection and perceived authenticity with potential tourists.

Stumbling on a friend’s holiday photo or a short travel video in their feed can increase the appeal of a destination. Unlike traditional advertising, which requires deliberate placement, peer content can influence simply by appearing in everyday browsing.

Australia has used participatory storytelling before. One powerful example is Tourism Queensland’s 2009 Best Job in the World campaign, which invited applicants from around the world to compete for a six-month caretaker role on Hamilton Island in the Great Barrier Reef. All they had to do was submit a short video explaining why they were the right candidate.

The campaign went viral, attracting over 34,000 applicants from 200+ countries, millions of website hits and global media overage.

Its success was driven less by who eventually got the job and more by the anticipation and unusual premise. It stood out because of simplicity and inclusivity, inviting real people to be part of the narrative.

Yet, 16 years on, Australia’s national tourism campaigns still rely on cinema ads, billboards and polished TV commercials built around icons such as Uluru and the Sydney Harbour Bridge.

From storytelling to story-sharing

The long-running Inspired by Iceland campaign consistently encourages locals to share authentic travel memories, cultural insights and personal stories.

Iceland Hour, launched in June 2010, saw schools, parliament and businesses pause for a coordinated social media push. Citizens and international supporters posted more than 1.5 million positive, personal messages across social media in a single week.

The campaign helped rebuild confidence after the Eyjafjallajökull volcanic eruption, and contributed to a 20% year-on-year rise in tourist arrivals.

Finland’s Rent a Finn campaign, launched in 2019, embraced a similarly human-centred approach. Showcasing ordinary people rather than cinematic landscapes, the campaign reached 149 countries, contributed €220 million in additional tourism revenue and reinforced Finland’s reputation as the “world’s happiest country”.

The United Kingdom’s Great Chinese Names for Great Britain campaign in late 2014 invited Chinese audiences to propose Mandarin nicknames for 101 British landmarks.

Suggested names, such as “Strong Man Skirt Party” for a kilted parade or “Stone Guardians” for Hadrian’s Wall, were featured on Google Maps and Wikipedia.

The campaign attracted more than 13,000 submissions, sparked widespread engagement on Chinese social media and was followed by a 27% increase in visits from China. It was worth an estimated £22 million boost to the UK economy.

Storytelling as a sustainability strategy

Participatory storytelling is not only more engaging, it can also be more sustainable.

Japan’s Hidden Gems campaign redirects tourist traffic away from overcrowded areas like Kyoto and Tokyo by spotlighting lesser-known destinations through locally led narratives. These stories promote slower travel, distribute benefits more evenly and reduce pressure on fragile ecosystems.

Australia faces a similar challenge. Our global image is still anchored to a handful of spectacular but vulnerable icons.

Yet tourism is about more than selfies in front of sandstone or coral. By inviting regional communities and visitors to tell their stories, we could shift attention beyond brochure highlights and encourage deeper, more diverse engagement.

There is also a strong economic case for prioritising emotional connection. Research shows when travellers form personal bonds with a place – through memorable, localised experiences – they are more likely to return, recommend it to others and stay longer.

Tourism is a relationship, not a product

Visitors are not passive consumers of postcard moments but active contributors to a shared story.

Australia’s tourism strategy should reflect this. This could mean amplifying visitor photos and videos on official platforms, inviting local communities to co-design campaigns, and drawing on authentic user-generated content rather than polished advertising and cinematic masterpieces.

That means letting go of perfection, embracing authenticity and trusting that the people who come here, as well as the people who live here, have stories worth sharing.

Katharina Wolf, Associate Professor in Strategic Communication, Curtin University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Read More........ → November 01, 2025

A US startup plans to deliver ‘sunlight on demand’ after dark. Can it work – and would we want it to?

Can a new satellite constellation create sunlight on demand? SpaceX/Flickr, CC BY-ND Michael J. I. Brown, Monash University and Matthew Kenworthy, Leiden University

A proposed constellation of satellites has astronomers very worried. Unlike satellites that reflect sunlight and produce light pollution as an unfortunate byproduct, the ones by US startup Reflect Orbital would produce light pollution by design.

The company promises to produce “sunlight on demand” with mirrors that beam sunlight down to Earth so solar farms can operate after sunset.

It plans to start with an 18-metre test satellite named Earendil-1 which the company has applied to launch in 2026. It would eventually be followed by about 4,000 satellites in orbit by 2030, according to the latest reports.

So how bad would the light pollution be? And perhaps more importantly, can Reflect Orbital’s satellites even work as advertised?

Bouncing sunlight

Sunlight can be bounced off a wristwatch to produce a spot of light . M. Brown

In the same way you can bounce sunlight off a watch face to produce a spot of light, Reflect Orbital’s satellites would use mirrors to beam light onto a patch of Earth.

But the scale involved is vastly different. Reflect Orbital’s satellites would orbit about 625km above the ground, and would eventually have mirrors 54 metres across.

When you bounce light off your watch onto a nearby wall, the spot of light can be very bright. But if you bounce it onto a distant wall, the spot becomes larger – and dimmer.

This is because the Sun is not a point of light, but spans half a degree in angle in the sky. This means that at large distances, a beam of sunlight reflected off a flat mirror spreads out with an angle of half a degree.

What does that mean in practice? Let’s take a satellite reflecting sunlight over a distance of roughly 800km – because a 625km-high satellite won’t always be directly overhead, but beaming the sunlight at an angle. The illuminated patch of ground would be at least 7km across.

Even a curved mirror or a lens can’t focus the sunlight into a tighter spot due to the distance and the half-degree angle of the Sun in the sky.

Would this reflected sunlight be bright or dim? Well, for a single 54 metre satellite it will be 15,000 times fainter than the midday Sun, but this is still far brighter than the full Moon.

Mylar reflectors can be unfolded in orbit. Josh Spradling/The Planetary Society, CC BY

The balloon test

Last year, Reflect Orbital’s founder Ben Nowack posted a short video which summarised a test with the “last thing to build before moving into space”. It was a reflector carried on a hot air balloon.

In the test, a flat, square mirror roughly 2.5 metres across directs a beam of light down to solar panels and sensors. In one instance the team measures 516 watts of light per square metre while the balloon is at a distance of 242 metres.

For comparison, the midday Sun produces roughly 1,000 watts per square metre. So 516 watts per square metre is about half of that, which is enough to be useful.

However, let’s scale the balloon test to space. As we noted earlier, if the satellites were 800km from the area of interest, the reflector would need to be 6.5km by 6.5km – 42 square kilometres. It’s not practical to build such a giant reflector, so the balloon test has some limitations.

So what is Reflect Orbital planning to do?

Reflect Orbital’s plan is “simple satellites in the right constellation shining on existing solar farms”. And their goal is only 200 watts per square metre – 20% of the midday Sun.

Can smaller satellites deliver? If a single 54 metre satellite is 15,000 times fainter than the midday Sun, you would need 3,000 of them to achieve 20% of the midday Sun. That’s a lot of satellites to illuminate one region.

Another issue: satellites at a 625km altitude move at 7.5 kilometres per second. So a satellite will be within 1,000km of a given location for no more than 3.5 minutes.

This means 3,000 satellites would give you a few minutes of illumination. To provide even an hour, you’d need thousands more.

Reflect Orbital isn’t lacking ambition. In one interview, Nowack suggested 250,000 satellites in 600km high orbits. That’s more than all the currently catalogued satellites and large pieces of space junk put together.

And yet, that vast constellation would deliver only 20% of the midday Sun to no more than 80 locations at once, based on our calculations above. In practice, even fewer locations would be illuminated due to cloudy weather.

Additionally, given their altitude, the satellites could only deliver illumination to most locations near dusk and dawn, when the mirrors in low Earth orbit would be bathed in sunlight. Aware of this, Reflect Orbital plan for their constellation to encircle Earth above the day-night line in sun-synchronous orbits to keep them continuously in sunlight.

Cheaper rockets have enabled the deployment of satellite constellations. SpaceX/Flickr, CC BY-NC

Bright lights

So, are mirrored satellites a practical means to produce affordable solar power at night? Probably not. Could they produce devastating light pollution? Absolutely.

In the early evening it doesn’t take long to spot satellites and space junk – and they’re not deliberately designed to be bright. With Reflect Orbital’s plan, even if just the test satellite works as planned, it will sometimes appear far brighter than the full Moon.

A constellation of such mirrors would be devastating to astronomy and dangerous to astronomers. To anyone looking through a telescope the surface of each mirror could be almost as bright as the surface of the Sun, risking permanent eye damage.

The light pollution will hinder everyone’s ability to see the cosmos and light pollution is known to impact the daily rhythms of animals as well.

Although Reflect Orbital aims to illuminate specific locations, the satellites’ beams would also sweep across Earth when moving from one location to the next. The night sky could be lit up with flashes of light brighter than the Moon.

The company did not reply to The Conversation about these concerns within deadline. However, it told Bloomberg this week it plans to redirect sunlight in ways that are “brief, predictable and targeted”, avoiding observatories and sharing the locations of the satellites so scientists can plan their work.

The consequences would be dire

It remains to be seen whether Reflect Orbital’s project will get off the ground. The company may launch a test satellite, but it’s a long way from that to getting 250,000 enormous mirrors constantly circling Earth to keep some solar farms ticking over for a few extra hours a day.

Still, it’s a project to watch. The consequences of success for astronomers – and anyone else who likes the night sky dark – would be dire.

The number of satellites visible in the evening has skyrocketed.

Michael J. I. Brown, Associate Professor in Astronomy, Monash University and Matthew Kenworthy, Associate Professor in Astronomy, Leiden University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Read More........ → October 17, 2025