This cycle of rate hikes will hit Australians harder than the one they endured in 2023.
asserted
they → hit → 2023
With a depleted budget, Prime Minister Anthony Albanese will find it harder to repeat the election spending playbook he used to see off ex-Coalition leader Peter Dutton against the new threat from One Nation’s Pauline Hanson.
asserted
he → find → Hanson
Voters were complaining about the cost of living crisis post-pandemic, when the COVID stimulus was still sloshing around the economy and helping people tread water.
asserted
people → complain → water
That’s now gone.
asserted
That → go → ?
And although Australians’ savings buffers are in OK shape, the share of mortgages on fixed rates has fallen from about 40 per cent then to around 5 per cent now.
asserted
share → fix → cent
Tuesday’s unsurprising hike takes the cash rate to a 15-year-high of 4.6 per cent.
asserted
hike → take → cent
The newly hawkish RBA is signalling that more rate hikes could come.
uncertain
hikes → signal → ?
The current rate is the second highest in the advanced world outside of Iceland and significantly higher than nations such as New Zealand and Canada where policymakers accepted more job losses to curb inflation.
asserted
policymakers → accept → inflation
The populist-right has established a once-unthinkable ascendancy while Labor and the RBA have been uncertain – political opponents would say negligent – about how to manage inflation.
asserted
opponents → establish → inflation
High prices hurt working and middle-class voters who feel the system isn’t working as it should – gold for Hanson.
asserted
it → hurt → Hanson
The RBA pursued an experimental approach, according to independent economist Chris Richardson.
uncertain
RBA → pursue → Richardson
The bank wanted to keep rates from going too high so that as many jobs as possible could be preserved, under its dual mandate that requires both lowered inflation and full employment.
uncertain
that → want → inflation
This worked in keeping tens of thousands in a job, but it contributed to higher inflation and rates for longer.
asserted
it → work → longer
Trimmed-mean inflation will be above the midpoint of the 2-3 per cent target band for almost seven years until mid-2028, according to the bank’s forecasts.
uncertain
inflation → trim → forecasts
Progressives increasingly feel the Reserve Bank is heartless and fails to understand that those struggling with mortgages are not the cause of inflation.
asserted
those → feel → inflation
Richardson says Labor should definitely be running a surplus.
asserted
Labor → say → surplus
“But I understand the politics of it,” he says.
asserted
he → understand → it
What he means is that fickle voters are reluctant to accept tough love.
asserted
voters → mean → love
The prime minister had a dig at UNSW Professor Richard Holden on Monday after the economist suggested Labor was gaslighting voters by talking only about the Iran war rather than the pre-conflict inflation problem.
uncertain
Labor → have → problem
Bank boss Michelle governor said on Tuesday that inflation was too high before the war and worsened by the conflict’s effect on petrol and fertiliser prices.
asserted
inflation → say → prices
“Richard Holden’s a well-known critic of the government.
asserted
Holden → ’ → government
That’s not surprising, his comments,” Albanese told reporters in South Australia.
asserted
Albanese → ’ → Australia
Holden said he had praised Labor for a number of policies including its contentious changes to negative gearing.
asserted
he → say → gearing
But he said he was unequivocally opposed to the government “frittering away a $400 billion fiscal windfall”.
asserted
government → say → windfall
Last term, Albanese got the ascendancy over Dutton with a series of crowd-pleasers including an $8.5 billion expansion of Medicare, a $16 billion cut to student debt, and giving all first home buyers access to 5 per cent deposits.
asserted
Albanese → get → deposits
He would be hoping that if he goes to the polls as close as possible to May 2028, rates may have reduced slightly and the wheels would have fallen off One Nation.
uncertain
wheels → hop → Nation
The current moment could be recalled as nothing more than a normal midterm slump, seen off by many a previous prime minister.
uncertain
moment → recall → minister
Rates could rise twice more after this week’s announcement, creating a summer of political pain for Labor and a rare opportunity for low-profile Opposition Leader Angus Taylor to steer the national conversation away from immigration and back to economics.
uncertain
Taylor → rise → economics
Turmoil on bond markets will make it more expensive to take on debt to fund election spending.
asserted
it → make → spending
And the budget is in worse structural shape than when Labor won power.
asserted
Labor → win → power
Modern failures on fiscal management, real wages and inflation are owned by each prime minister-treasurer duo since Julia Gillard and Wayne Swan.
asserted
failures → own → Gillard
Abbott and Hockey tried and failed to rein in spending with a budget nobody would cop.
asserted
nobody → try → budget
Morrison and Frydenberg kicked off the inflation crisis during COVID, as Treasurer Jim Chalmers likes to point out.
asserted
Chalmers → kick → COVID
But Chalmers reflex habit of blaming the previous Coalition government for economic troubles is wearing thin among his colleagues, and will be ancient history by the time of the next election.
asserted
habit → blame → election
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asserted
Subscribers → sign → newsletter
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