Why Inflation Isn’t Dying - What the RBA Will Do that Property Investors Must Understand. Ken Raiss
•February 23, 2026
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Why It Matters
Understanding the underlying drivers of inflation helps investors and policymakers navigate rate decisions that affect borrowing costs and asset values. It signals where strategic property investments can outperform in a high‑rate environment.
Key Takeaways
- •Sticky inflation driven by supply bottlenecks, not just spending
- •RBA may keep rates high to address capacity constraints
- •CPI underestimates household cost pressures
- •Property investors should target A‑grade assets in demand zones
- •Productive deficits can support growth without harming investors
Pulse Analysis
Australia’s inflation narrative has shifted from headline‑grabbing fiscal excesses to a more nuanced supply‑side story. While headline CPI numbers have modestly softened, underlying price pressures persist in sectors constrained by labor shortages, logistics bottlenecks, and limited housing construction. This divergence means the Reserve Bank of Australia (RBA) faces a tighter policy dilemma: lowering rates could reignite wage‑price spirals, yet keeping them high risks choking consumer spending. Investors who grasp this dynamic can better anticipate the timing and magnitude of future rate moves.
For property investors, the RBA’s stance translates into a prolonged environment of elevated borrowing costs. The prudent response, as highlighted by Raiss and Yardney, is to concentrate on A‑grade assets—properties with strong tenant demand, prime locations, and robust cash flows. These assets tend to weather higher rates better than speculative or lower‑quality holdings, preserving capital and delivering stable yields. Moreover, focusing on regions with genuine population growth and infrastructure investment can offset the drag from tighter monetary policy.
Finally, the discussion reframes deficits not as a fiscal sin but as a potential catalyst for productive growth. When government borrowing funds infrastructure, housing supply, or skills development, it can alleviate the very capacity constraints fueling inflation. This approach supports a healthier economic backdrop for both households and investors, reducing reliance on aggressive rate hikes. In essence, a balanced view of inflation, monetary policy, and strategic property positioning offers a clearer path to wealth creation in an uncertain macro environment.
Original Description
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Inflation has eased… except where it hasn’t.
Interest rates were meant to be heading down… until they weren’t.
And suddenly everyone’s blaming government spending.
But is Canberra really the culprit - or is that just a convenient headline?
Today, Ken Raiss and I unpack what’s actually driving Australia’s sticky inflation, why the RBA is worried about “capacity constraints”, and what policy makers could do that would genuinely take pressure off prices - without smashing households and without sabotaging the property market.
Now you've probably read about inflation and heard about it a hundred times by now, but having been involved in financial markets and property for over 50 years each, Ken and I are going to bring you a different perspective today and some new ways of thinking about things.
So please bear with us because I hope we're going to bring you some clarity and direction.
Takeaways
• Inflation is the increase in prices over time.
• Interest rates are used to control inflation, but can have negative effects on consumers.
• Government spending can contribute to inflation, but it's not the sole cause.
• Capacity constraints in the economy affect productivity and inflation rates.
• CPI may not accurately reflect the real cost of living for households.
• Investors should focus on A-grade assets in strong demand areas.
• Deficits can be acceptable if they lead to productive investments.
• Consumer confidence is crucial for economic stability.
• Strategic planning is essential for navigating the property market.
• Understanding economic fundamentals is key to making informed investment decisions.
Links and Resources:
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Michael Yardney
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Ken Raiss, Director of Metropole Wealth Advisory
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