The money is once again on a Melbourne Cup rate rise from the Reserve Bank of Australia as the latest data points to an economy running much hotter than hoped.
As mortgage holders brace for another hit, questions will be rightly asked about whether there isn’t more the Albanese Government could be doing to rein in inflation.
RBA governor Michele Bullock and the board will meet on Tuesday to discuss interest rates.Credit: Bloomberg
On Tuesday, the RBA will consider the latest rounds of data on spending and employment. The latest read on inflation showed it running at 5.4 cent annually. Unemployment remains low at 3.6 per cent, while retail spending has ticked up by 2 per cent compared with the same time last year.
All of this paints a combined picture of an economy that is growing faster than necessary to bring inflation within the RBA’s target range of 2 to 3 per cent by the end of next year.
There are two options for slowing economic growth – higher interest rates or tighter fiscal policy. Whereas monetary policy like interest rate rises hits households with mortgages, it is a blunt tool. Fiscal policy, on the other hand, can be more nuanced and targeted in who it impacts.
Australia, we need to talk about tax.
To date, the federal government has played a role in slowing the economy, returning a $22.1 billion surplus in the last financial year. However, as it gets ready to deliver $254 billion in Stage 3 tax cuts next July, there should be real questions asked about how such largesse can be justified in the current economic climate.
The Stage 3 tax cuts put more money back into the pockets of middle and high-income households – that is, households with a lower need for income relief. The changes do this by removing the middle tax bracket of income taxation for those earning between $120,000 and $180,000, flattening the progressive income structure. They increase the top tax bracket to $200,000 and reduce the marginal tax rates for incomes between $45,000 and $200,000 to 30 per cent.
More economic pain is coming, with women set to bear the brunt of it
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05.11.2023
The money is once again on a Melbourne Cup rate rise from the Reserve Bank of Australia as the latest data points to an economy running much hotter than hoped.
As mortgage holders brace for another hit, questions will be rightly asked about whether there isn’t more the Albanese Government could be doing to rein in inflation.
RBA governor Michele Bullock and the board will meet on Tuesday to discuss interest rates.Credit: Bloomberg
On Tuesday, the RBA will consider the latest rounds of data........
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