Grim, worse and dire: the three ways Donald Trump is playing havoc with Reserve Bank forecasts

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Donald Trump is not living rent-free in the heads of central bankers.

He’s ratching up rents like the New York property tycoon he was before moving into the White House, creating pandemonium and pain for those trying to direct monetary policy.

The decision by the Reserve Bank to lift interest rates on Tuesday - and the associated risk with that move - was driven in large part by the occupant of the White House and his war against Iran.

Yes, the nation had inflation pressures before the war began. The rate hikes of February and March were clear evidence that low productivity improvement meant even modest economic growth resulted in a lift in inflation.

But throw in a war that has pushed up prices from oil to fertiliser to helium, and you get the mess that is causing headaches for every central bank.

The intensity of that headache is evident in the RBA’s best guess on how the economy will perform over the next 48 months.

It was a year ago this week that the Reserve released its then........

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