Governor Philip Lowe says it is “not unreasonable” to expect the cash rate to climb to 2.5%. That’s an extra $600 to service a $500,000 mortgage.
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Of the news on prices, wages, interest rates and unemployment, only the unemployment update looks set to be positive for the Coalition.
Enormous price rises beyond Australia’s control are cutting our standard of living. Cutting it further by rising rates won’t help.
The Reserve Bank has scheduled an announcement for Thursday. The government will unveil a second coronavirus stimulus package within days.
Even when interest rates are already low, on balance further cuts boost rather than harm confidence.
Interest rate cuts don’t work like they used to, and they help us put off the hard things we need to do to improve our lives.
The Reserve Bank has adjusted rates in previous election campaigns, but it needs to have a very, very, good reason.
While the RBA might not be able to influence the current cash rate, it can still influence longer-term rates by offering guidance about its future policy decisions.
Statements from the RBA show it’s little wonder markets are not predicting a rate increase this year.
The data shows a tricky balancing act for policy makers. Interest rates will need to rise but too quickly could squash the recovery.
Top contributors
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Visiting Fellow, Crawford School of Public Policy, Australian National University
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Professor of Economics, UNSW Sydney
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Professor, Monash University
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Program Director, Trade and Investment, United States Studies Centre, University of Sydney
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Principal Research Fellow, Melbourne Institute of Applied Economic and Social Research, and Professor of Economics, Department of Economics, The University of Melbourne
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Postdoctoral Research Fellow, The University of Melbourne
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Professor of Economics, The University of Melbourne
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Industry Professor, University of Technology Sydney
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Lecturer in Economics, Monash University
