Should the RBA keep increasing the cash rate in 2023?

First Content Piece
Select one topic and apply inclusive perspectives in writing this content
Should the RBA keep increasing the cash rate in 2023?

Introduction
The goal of the discussion in this content piece is to offer a thorough analysis of whether the Reserve Bank of Australia should keep raising the cash rate. Analysing the perspectives of many stakeholders, such as aspects of consumers, businesses, the government, financial institutions or banks, and the overall economy, helps to explain an inclusive perspective and highlight possible effects of increasing the cash rate.

Discussion
Consumer’s Perspective
An increase in the cash rate may have a positive or negative impact on consumers. For retirees and depositors who depend on interest income, one advantage is that it may result in higher savings account interest rates (Mankiw, 2020). Therefore, the purchasing power of the consumer is enhanced, and therefore, economic activities and operations may get better, reducing the chance of inflation. However, a rise in the cash rate can also lead to higher borrowing rates, which might limit credit availability for those who already have debt and may also lower consumer spending. Thus, it is important to think about how raising the cash rate would affect consumers' ability to spend and how much of a burden it would place on them. In this regard, striking the right balance is required, and that’s where the RBA has the principal role to play.
Company or Business Perspective
Different businesses have different views on how an increasing cash rate would affect them. On the one hand, raising the cash rate can aid in reducing overborrowing, lowering the chance of asset bubbles and, thereby, loan defaults, and fostering financial stability (Mankiw, 2020). By promoting a more sustainable economic environment, this can help firms in the long run. However, the opposing side claims that rising borrowing prices can reduce corporate profitability, especially for SMEs in the nation that rely significantly on credit (Bakhtiari et al., 2020). Moreover, higher interest rates may make it more difficult to decide whether to invest, expand, or hire more staff. Thus, the economy is slowed down due to disrupted economic activities. Hence, it is important to carefully analyse the possible implications for corporate investment as well as the general health of the private sector.
Government’s Perspective
In managing the economy and establishing policies, the government has essential roles. An increase in the cash rate may have both favorable and unfavorable effects for the government. Higher interest rates have the potential to draw in foreign capital, boost the value of the currency, and aid in keeping inflation under control (Mankiw, 2020). Hence, economic stability and investor confidence in the financial markets may both be influenced by these variables. Contrarily, it is crucial to take into account how it can affect the price of repaying government debt. The cost of repaying the government's outstanding debt rises along with the cash rate, placing pressure on the federal budget (Yared, 2019). Therefore, the trade-offs between economic stability and the monetary effects of rising interest rates need to be carefully considered by the government as well as the central bank of the nation.
Banking or Financial Institution’s Perspective
Because the rise in the cash rate directly affects their borrowing and lending operations, financial organisations, especially banks, have a keen interest in the cash rate. The profitability of financial institutions may be improved by an increase in loan interest rates as a result of a rise in the cash rate (Mankiw, 2020). Notably, the capacity of borrowers to repay their loans and the possible influence on loan default rates should also be taken into account by financial institutions. It is important to understand that the stability of the financial system might be impacted by a considerable increase in borrowing costs since default risk on loans may rise (Ashraf and Shen, 2019). Hence, it is crucial to carefully decide upon the cash rate in order to combine the needs of the banking system with the stability of the economy as a whole.
Overall Economy Perspective
The economy is significantly impacted when the cash rate is raised. Investor confidence may increase due to an increased cash rate. It may also manage inflation, protect purchasing power, and draw in foreign investment (Mankiw, 2020). However, any negative impact on economic growth must be considered, such as a decline in consumer and business investment. Henceforth, the decision should be made after a careful analysis of various points of view, taking into consideration the current status of the economy as well as the accompanying risks and benefits. While maintaining price stability and long-term economic growth, the RBA should adopt a policy that takes into account the needs of all stakeholders.

Conclusion
An inclusive and comprehensive perspective that takes into account the opinions of consumers, businesses, the government, banks, and the economy as a whole is essential when choosing whether to raise the cash rate in 2023. The RBA will be able to make an informed judgment that balances the interests of diverse stakeholders while guaranteeing growth and stability in the economy by assessing the possible advantages and risks.















Second content piece
Pick any issue or problem in any field, sector, or industry you choose (e.g., health, aviation, tourism, automotive, property, banking and finance, etc.) and analyse it

Introduction
In the current analysis, Australia's mining industry has been chosen. The mining industry has considerable difficulties globally. Pressures related to the environment and climate change, trade disputes and geopolitical unrest, fluctuating and erratic demand, technological advancements, and global scarcity of maintenance specialists are just a few examples. If mining is to be profitable in the long run, these issues must first be fixed. Mining companies and shareholders must tackle these issues head-on if they want to succeed in the cutthroat, closely scrutinised mining industry. the Australian mining industry is going through many challenges among which the evident ones are- pressures from the environment, society, and the climate, worries about health and safety, price volatility, geopolitics, demand unpredictability, a lack of maintenance expertise, and other reasons. The current challenge that has been selected for further analysis is price volatility.
Pick any issue or problem (issue of price volatility) which occurs in any field (Mining)
"Chief Executive Officer of Rio Tinto Iron Ore, Andrew Harding, stated this at the WA Annual Resources Overview event", saying that iron ore prices fell throughout the first half of the year. A rise in the supply of goods being shipped by water has put pressure on pricing this year. Compared to the end of the year, iron ore cost less than $80 a tonne in September 2015. Inevitably, when prices drop, high-cost producers come under pressure. According to this incident, price volatility would persist. One of the main reasons for price volatility is the considerable growth in nickel shipments from the Philippines and Indonesia. Due to the fact that there was more nickel than expected, the price decreased (CEDA, 2015). For the first time in 2018, the price of gold went below US$1200 per ounce early this month, according to "AngloGold Ashanti Senior Vice President for Australia Mike Erickson". Due to exorbitant costs, many Australian gold miners are barely turning a profit. Mining had the greatest GDP share of the top 10 industries in Australia prior to the present crisis, making up 10.7% of the nation's GDP in the second quarter (CEDA, 2015).
The Australian economy receives $121 billion or more on average a year from the mining industry. Exports generate an average of $138 billion in revenue annually, or 54% of all goods and services. “Together, BHP Billiton (BHP), the second-largest mining firm in Australia, and "Rio Tinto, the third-largest mining corporation in the world (BHP at 44.6% and Rio Tinto at 34.8%), account for 79.4% of the overall revenue base of the Australian mining industry” (The Convention, 2016). However, the price volatility has caused Rio Tinto and BHP to face a number of operational and financial challenges. Apart from that, the impact of this price vitality gets reflected in a lack of good domestic opportunities, and a drop in the price of commodities in 2016 led enterprises to reassess their cost structures. The industry is currently going through one of its most challenging periods in history. A significant contributor to the structural strain on the sector is the Australian mining industry's failure or unwillingness to react quickly enough to changing market conditions. The failure of the mining industry to change operational and business practices established during the mining boom resulted in significant losses for the industry in 2015 (The Convention, 2016).
Obtaining equity or debt money through bank loans for the purpose of financing mergers and acquisitions can be difficult. “The strategic alternatives available to mining businesses are further constrained by energy sector volatility. Industry analysts predict that many mining companies will close, and a variety of assets will be made available for sale at absurdly low rates”. To address the issue, mining companies began terminating employees. In the mining industry, about 2000 jobs have already been lost in 2016; many more are anticipated. Between 2013 and 2014, there was a 2.2% (4,170) decrease in mining industry employment in Australia (The Convention, 2016). As the stakes of price volatility are high, they need to be controlled using economically viable strategies, which are discussed below.
Use Relevant economic concepts to shed some light on addressing the issue/problem
According to the theory of price volatility, it is a term used to describe how much a stock's price fluctuates over time. Some investment possibilities have a high degree of change or high price volatility, while other opportunities have a low degree of change or low-price volatility. Due to price volatility, the price to generate a mineral as a primary product is higher than the price to create it as a by-product. For instance, it is often less expensive to produce molybdenum as a by-product than to mine it because the mining and processing costs are mostly shared with those of copper (Redlinger and Eggert, 2016). Because of the huge difference in cost between manufacturing a mineral as a major product and as a by-product of the same mineral, the marginal source of supply for the metal shifts from being a by-product to a main product. This causes a large jump in the total supply curve for the metal. The only way to deal with this issue of price volatility is to increase productivity so that the increased price can make sense to consumers. The currency and commodities markets of the world economy are subject to swings that are beyond the control of miners. However, they do have some influence over how they behave. As they place more focus on being the lowest-quartile cost producers, businesses will need to forego reactionary cost-cutting measures in lieu of long-term cost management activities. Consider the following strategies if the Austrian sector wishes to increase productivity.
1. Improve mine-planning: By raising cut-off grades and reducing capital costs, high-quality products can be switched in order to produce assets with reduced potential for production and shorter mine lifespan. Both better sequencing at mining sites and considering the benefits (and risks) of lowering reserves will result in successful optimisation (Mining Review. 2015). “To hire and retain qualified mine planners who can improve operational efficiency and oversee daily adherence to production levels, mining locations, and mineral composition, it could be necessary to raise production from lower-cost mines and give lower-cost projects precedence”.
2. Enhance risk and financial management: According to evaluations of mining projects conducted independently in Australia, 65% of mega mining projects costing more than AU$ 500 million fail to achieve their planned objectives. A clear line of sight on actual costs, including costs per unit of production, can be established by mining firms to enhance project outcomes (Mining Review. 2015). Inform mining operators, manufacturers, and “engineering, procurement, and construction management (EPCM)” firms of essential indicators to communicate in order to optimise working capital management.
3. Effective workforce planning and technological advancements: To increase personnel lifecycle management and increase employee productivity, mining companies must explicitly identify their workforce assumptions. Mining companies could make better use of technology to achieve these objectives (Mining Review. 2015).
Conclusion
In light of the above analysis, it is certain that in the coming days, the Australian mining sector is likely to face many other economic and competitive challenges, among which this price volatility issue will be consistent. Cutting jobs is not the best strategic tool to combat it. “Whether it is through technology, innovation, or design thinking problem-solving techniques, mining firms need to develop fresh and cutting-edge ways to generate value”.
References
Ashraf, B.N. and Shen, Y., 2019. Economic policy uncertainty and banks’ loan pricing. Journal of Financial Stability, 44, p.100695.
Bakhtiari, S., Breunig, R., Magnani, L. and Zhang, J., 2020. Financial constraints and small and medium enterprises: A review. Economic Record, 96(315), pp.506-523.
CEDA, 2015. MINING SECTOR FACES SIGNIFICANT PRICE VOLATILITY. Available at: https://www.ceda.com.au/NewsAndResources/News/Resources/Mining-sector-faces-significant-price-volatility (Accessed: 18 May 2023).
Mankiw, N.G., 2020. Principles of economics. Cengage Learning.
Mining Review. 2015. 8 strategies for reclaiming efficiency and lowering costs in mining. Available at: https://www.miningreview.com/top-stories/8-strategies-for-reclaiming-efficiency-and-lowering-costs-in-mining/ (Accessed: 18 May 2023).
Redlinger, M. and Eggert, R., 2016. Volatility of by-product metal and mineral prices. Resources Policy, 47, pp.69-77.
The Convention, 2016. Mining outlook: volatility will force cuts to operations and jobs. Available at: https://theconversation.com/mining-outlook-volatility-will-force-cuts-to-operations-and-jobs-55938 (Accessed: 18 May 2023).
Yared, P., 2019. Rising government debt: Causes and solutions for a decades-old trend. Journal of Economic Perspectives, 33(2), pp.115-40.