Reserve Bank underestimates inflationary pressures, risks tightening 'too late' - economist

Fresh debate over the Reserve Bank's recent surprise decision to keep the Official Cash Rate on hold until December. 

The central bank's chief economist Paul Conway has addressed the decision at a conference in Sydney. 

He voted against holding the cash rate and has acknowledged it created volatility, but says OCR decisions are made based on economics, not based on market pricing. 

Independent economic commentator Tony Alexander told Mike Hosking the central bank is once again taking too long to act. 

He says the Reserve Bank has allowed inflation to average 4% over the past six-and-a-half years, when it should be averaging 2%. 

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