The economic cake: why we can’t both have it and eat it

Professor Christoph Schumacher
National Business Review
10 May, 2023

When I started learning English, I didn’t understand the popular idiomatic proverb: “You can’t have your cake and eat it too.” Of course, you can eat your cake if you have one. It’s the whole point of a cake – being eaten. Following the discussions after the recent release of the OCR, GDP growth rate, employment figure, and inflation value, I think I finally understand.

The Reserve Bank has increased the OCR to 5.25% to finally gain some control over inflation. If money becomes more expensive, people will spend less, reducing the pressure on prices. It worked. Inflation dropped from 7.2% in the fourth quarter of 2022 to 6.7% in the first quarter of 2023. This was a bigger fall in inflation than expected.

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