Biggest threat to Australia's AAA credit rating revealed by leading economist Warren Hogan as RBA struggles

A leading economist has outlined the major drag on the government’s AAA credit rating after the Reserve Bank of Australia revealed its poor financial position.

Following the onset of the pandemic, the RBA purchased more than $280b worth of state and federal government bonds, which helped inject cash into the economy while it kept interest rates low.

Existing bonds and interest rates have an inverse relationship, meaning when interest rates rise the value of bonds drops because new bonds are offered at better rates.

This is a detriment to the RBA as it purchased bonds when rates were very low.

Now that rates are higher the central bank will have to hold the bonds to maturity.

This is a factor in the RBA's poor financial position as it struggles with holding more debt than assets under