The most politically damaging thing Michele Bullock delivered on Tuesday wasn’t another interest rate rise.
asserted
Bullock → deliver → Tuesday
It was her description of how Australians now feel while their government insists it’s managing the economy responsibly.
asserted
it → feel → economy
People ‘feel like it’s a recession because they feel poorer’, the RBA governor warned.
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governor → feel → ?
For Anthony Albanese and Jim Chalmers, that’s a problem no reassuring press conference laced with spin can fix.
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conference → ’ → spin
The fifth rate increase this year (a year after the Treasurer reassured us that inflation problems were behind us) has taken the cash rate to 4.85 per cent.
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problems → reassure → cent
The RBA expects slower growth, rising unemployment and inflation that doesn’t return to target until mid-2028.
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that → expect → mid-2028
Albo had been hoping to call an early election for late next year.
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Albo → hop → year
It is becoming increasingly likely he now runs full term, in the hope that the longer he waits the more likely it is that rates come down.
asserted
rates → become → hope
Michele Bullock is a woman with a mission to crush inflation... and she may have inadvertently crushed a political dream of the Prime Minister's, too
The RBA isn’t forecasting a recession, defined as two consecutive quarters of negative economic growth.
uncertain
RBA → crush → growth
But growth is expected to be anaemic, and a per capita recession in 2027 is a distinct possibility.
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recession → expect → 2027
Low economic growth, high interest rates and inflation, and rising unemployment is a terrible confluence of circumstances for any political leader.
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growth → rise → leader
It threatens Labor on several fronts.
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It → threaten → fronts
Borrowers lose spending power.
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Borrowers → lose → power
Businesses lose customers.
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Businesses → lose → customers
Workers worry about their jobs.
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Workers → worry → jobs
Even Australians without mortgages find their purchasing power eaten away by inflation.
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power → find → inflation
A government can survive an unpopular economic decision.
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government → survive → decision
It’s much harder to survive the impression that the sacrifice keeps growing while promised improvements keep retreating or never materialising at all.
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improvements → ’ → impression
Bullock also offered a pointed reminder about institutional boundaries: ‘Independence is a two-way street’, she said, avoiding commenting on Labor’s fiscal management while insisting that setting interest rates is her job and she’ll do what she has to in order to bring inflation back under control.
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she → offer → control
The simple fact is that the task of doing that is made harder when a government spends and spends and spends.
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government → do → that
Labor’s record spending makes it harder for Bullock to avoid lifting rates.
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Bullock → make → rates
Albanese owns this looming test as much as his Treasurer.
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Albanese → own → Treasurer
Everyone knows he runs the show and pushes his treasurer around at will.
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he → know → will
He's pictured in the Caribbean with Queen Camilla this week, above
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He → picture → Camilla
Public demand had been weaker than the bank expected earlier this year, and its growth had eased while private demand accelerated.
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demand → expect → ?
Chalmers argued that his budgets were therefore not the driving cause of inflation.
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budgets → argue → inflation
Bullock nevertheless maintained that total demand, public and private put together, remained excessive, effectively looping government spending in as part of the inflation problem.
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demand → maintain → problem
Besides, a not inconsiderable amount of private demand is fuelled by government spending, a point Chalmers either doesn’t appreciate or chooses to ignore when spinning his defence.
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Chalmers → fuel → defence
The political question is bigger than who supplied the latest inflationary impulse.
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who → supply → impulse
It is what the government is prepared to change now that the crisis is well and truly upon us.
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crisis → change → us
An overseas shock can be beyond Canberra’s control, but how it responds is important.
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responds → respond → control
Laying blame on international factors doesn’t help Australians doing it tough.
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Australians → lay → it
Labor had ample opportunities to reduce spending to counter the inflationary effects of the ongoing war.
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Labor → have → war
It didn’t do that, at least not sufficiently.
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It → do → that
Will it finally do so now?
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it → do → ?
Which makes December’s budget update a test of seriousness for Labor.
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update → make → Labor
Chalmers has promised further savings but hasn’t committed to those savings exceeding new spending.
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savings → promise → spending
Announcing cuts in one column while adding more spending in another might produce an impressive talking point.
uncertain
Announcing → announce → point
It doesn’t sufficiently reduce pressure across the economy.
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It → reduce → economy
Albo owns this looming test as much as his Treasurer.
asserted
Albo → own → Treasurer
…and 10 more, not listed.
The Aporia
