Tom Panos explodes at Reserve Bank governor Michelle Bullock

Auctioneer Tom Panos has hit out at Reserve Bank Governor Michele Bullock for suggesting inflation is a bigger problem than high interest rates.

Ms Bullock also warned that the Reserve Bank is prepared to raise rates further if inflation does not improve as expected, prompting Mr Panos’s furious outburst.

‘The governor of the Reserve Bank recently said something very stupid: ‘inflation is more damaging than interest rates’.’

However, Mr Panos said the financial pressures posed by high interest rates are much more serious than the impact of rising prices due to inflation.

If you think paying an extra $1.50 for a cup of coffee because of inflation is more damaging than having to pay $4,000 a month in mortgage payments instead of $2,500, you’re wrong.

“Ms. Bullock, the person in question can decide for themselves whether or not to buy a cup of coffee,” he explained.

“But they have no choice about paying back their loan, so you’re not 100 percent right at all.”

The Reserve Bank has raised interest rates 13 times in 2022 and 2023 to 4.35 percent, the highest level in 12 years.

Reserve Bank of Australia Michele Bullock (pictured) also warned that the Reserve Bank is prepared to raise rates further if inflation does not improve as expected.

Variable mortgage terms are 70 percent higher than at the beginning of 2022, as interest rates have risen from a ‘two’ to a ‘six’.

Inflation rose to 3.8 per cent in the last financial year, despite the biggest increases since the late 1980s, with the consumer price index well above the RBA’s 2-3 per cent range.

Mr Panos argued: ‘What is so special about the fact that we need to get inflation down to exactly between two and three per cent in that range?

“Do you really think the price of a cup of coffee will go back down from $6.50 to $5.00?”

However, many Australians were also quick to criticise Panos’ views on inflation.

“Maybe don’t borrow so much?” said one.

“The RBA is not there to stop people from borrowing too much,” added a second.

“Inflation hits the poor the hardest – they own no assets. Maybe we should be cracking down on the banks for allowing people to take out huge mortgages,” said a third.

“Tom is a real estate salesman, he just wants interest rates to go down so he can sell his wares,” explained another.

His comments come after Finance Minister Jim Chalmers earlier this month accused the Reserve Bank of “destroying” the economy with its interest rate strategy.

Bullock, however, claimed that inflation was the biggest problem.

“High inflation is harmful to everyone, and especially to the most vulnerable,” she said.

‘It limits what people can buy with their wages, it erodes the value of savings and it disproportionately hits people on low or fixed incomes.’

Former RBA economist Jonathan Kearns agreed.

“The erosion from inflation is greater than interest rates,” Dr Kearns told AFR.

‘The impact of inflation is spread across all households, so everyone feels it. Interest rates are concentrated for just a few households.’